For environmental policy influencing trade flows three relevant modes of environmental regulation need to be distinguished: product regulation, production process regulation, and — particularly as a subcase of the latter — allocation of environmental control costs. Product regulation generally enhances the domestic market position of domestic production, while process regulation may reduce the domestic position in international markets. To mitigate the latter effects subsidies to cover environmental control costs are discussed.
KeywordsEnvironmental Policy Social Account Matrix Exposed Sector Trade Measure Tropical Timber
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