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Environmental and Resource Economics

, Volume 70, Issue 1, pp 223–248 | Cite as

Trade, Transboundary Pollution, and Foreign Lobbying

  • Charles F. Mason
  • Victoria I. Umanskaya
  • Edward B. Barbier
Article
  • 285 Downloads

Abstract

In this paper, we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution. We show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream (polluted) country. But if the upstream (polluting) country can lobby the downstream government to impose lower tariffs, distortions brought by corruption and foreign lobbying lead to a rise in the upstream country’s social welfare, and to a decrease in social welfare in the downstream country. Thus, the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments’ susceptibility to foreign political influence.

Keywords

Transboundary pollution Differential game Lobbying 

JEL Classification

D72 F18 F59 Q56 

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Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  • Charles F. Mason
    • 1
    • 2
  • Victoria I. Umanskaya
    • 3
  • Edward B. Barbier
    • 1
  1. 1.Department of Economics and FinanceUniversity of WyomingLaramieUSA
  2. 2.Grantham Research InstituteLondon School of EconomicsLondonUK
  3. 3.Department of EconomicsOccidental CollegeLos AngelesUSA

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