Multilateral trade and environmental reforms in a polluted open economy

  • Alberto Gallegos David Universidad Anáhuac México Norte
Keywords: optimal policies, international trade, multilateral externalities, environment, trade reforms
JEL Classification: F18

Abstract

This paper presents welfare-improving reforms for a polluted open economy aiming to reduce distortions from the use of trade and pollution taxes applied at a sub-optimal level. Using a general equilibrium model where two final goods are produced using an intermediate pollutant input and traded with a foreign country, the domestic economy chooses trade and environmental policies optimally. Terms of trade effects are key to finding that free trade and non-zero pollution taxes are the directions for multilateral welfare-improving reforms.

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Published
01-07-2017
How to Cite
Gallegos David, A. (2017). Multilateral trade and environmental reforms in a polluted open economy. Estudios Económicos, 32(2), 293-315. https://doi.org/10.24201/ee.v32i2.9