Optimal Tariffs on Exhaustible Resources
in the Presence of Cartel Behavior

Stephen Jui-Hsien Chou^a and Ngo Van Long^b*
aNational Tsinghua University, Taiwan
^bMcGill University, Canada

Abstract

We present a model of bilateral monopoly between resource-importing countries and a resource-exporting country. We show that there exists a threshold level of marginal cost beyond which the resource-importing coalition would prefer bilateral monopoly to free trade. In the case of two non-collusive asymmetric importing countries, we show that asymmetry of market sizes also plays a role in determining the welfare gains under free trade or tariff war. As importing countries become more asymmetric, their aggregate welfare is more likely to be higher under the tariff war.

JEL Classifications: F12, F21, F23

A Dynamic Reciprocal Dumping Model of International Trade

Kenji Fujiwara^a*
aKwansei Gakuin University

Abstract
This paper constructs a differential game model of reciprocal dumping to reconsider the welfare effects of trade liberalization (tariff reductions). We show that welfare in autarky exceeds welfare in trade for any tariff level, namely that any trade is detrimental. Comparing our result with a static result, we discuss that the closed-loop property of feedback strategies in differential games plays a significant role in our argument.

JEL Classifications: C73, F12

An International Trade Network Analysis of the Environment

Daniel E. May^a*
aUniversity of Wolverhampton

Abstract
The paper uses the new advances of the International Trade Network literature to analyze the relationship between international trade and the environment in a global context. This framework shows that bilateral agreements can either increase or decrease local pollution depending on the current trade network structure, and that the environment is benefited when there is some degree of international trade integration. The article also shows that the stability of the international trade system is strongly affected when environmental considerations are included in the welfare function.

JEL classifications: F12, Q56

Pollution Abatement Equipment and International Migration

Kenji Kondoh^a*
aChukyo University, Japan

Abstract
By introducing a pollution abatement equipment industry into the Copeland and Taylor (1999) model, we find that the real wage rate will be higher in a developed country with a superior pollution abatement technology. On the other hand, the effects of environmental tax policies on the real wage rate would not clear. Migration has positive effects on the wage rate, the stock of the environmental tax and welfare of the worker in at least one country. Finally we show the possibility that both countries gain from international migration.

JEL Classifications: F22, J61, Q56

Trade, Technical Progress and the Environment:
the Role of a Unilateral Green Tax on Consumption

Daniela Marconi^a*
aBank of Italy

Abstract
The paper proposes a two-country general equilibrium model of endogenous growth and trade between two regions, North and South, with different environmental standards. Pollution is a byproduct of consumption and in order to abate it the northern region unilaterally imposes a green tax on consumption. As the tax affects domestic demand of consumer goods according to their pollution intensities, regardless of where those goods are produced, the model shows that such a unilateral environmental policy can increase the speed of technological change and pollution abatement in both regions.

JEL classifications: 030, F14, F18

The Effects of Unilateral Environmental Regulations
in a World with Capital Mobility and Trading Costs

 Arsène Riebera and Thi Anh-Dao Tran^b*
aUniversity of Rouen, France
^bUniversity of Rouen and University of Paris 13, France

Abstract
Our paper discusses the management of global pollution issues in a North-South economic geography model with capital mobility and trading costs. We first show that a unilateral environmental policy adopted by the developed country drives the industrial firms out of the region and lowers real income. However, the ecological dumping argument has only found partial theoretical support as the Northern larger market still attracts firms. More importantly, the total effect on the environment appears ambiguous: due to multiple interactions at work, globalization can make pollution even worse. These outcomes provide arguments for international cooperation. However, although efficient in reducing global pollution, this second option hurts the South both in terms of industrial relocation and real income.

JEL classifications: F12, 019, R38

International Environmental Agreement
Formation and Trade

Baomin Dong^a,* and Xin Zhao^a
aUniversity of International Business and Economics

Abstract
This paper examines self-enforcing International Environmental Agreements (IEAs) in an open economy environment. Using an extended model of Barrett (1994), we show that: (i) equilibrium tariff is positive; (ii) the endogenously determined size and the effectiveness of an multilateral IEA are the tradeoff of four effects, i.e. entry effect, level effect, leakage effect, and tariff effect. The paper also offers an alternative explanation for the minimum participation clause adopted by most IEAs that is consistent with the mandate of an IEA.

JEL Classifications: H41, Q20, F12