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- Title
Trade sanctions and green trade liberalization.
- Authors
Naghavi, Alireza
- Abstract
This paper studies the impact of a World Trade Organization withdrawal of trade concessions against countries that fail to respect globally recognized environmental standards. We show that a punishing tariff can be effective when environmental and trade policies are endogenous. When required standards are not too stringent with respect to the marginal damage of pollution, compliance along with free trade as a reward is the unique equilibrium outcome. A positive optimal tariff in the case of non-compliance prevents complete relocation to pollution havens, but only works as a successful credible threat and does not emerge in equilibrium.
- Subjects
COMMERCIAL policy; TARIFF laws; COMMERCIAL law; WORLD Trade Organization; FREE trade &; the environment
- Publication
Environment & Development Economics, 2010, Vol 15, Issue 4, p379
- ISSN
1355-770X
- Publication type
Article
- DOI
10.1017/S1355770X10000094