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Game Models Of Environmental Policy In An Open Economy

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  • Batabyal, Amitrajeet A.
Abstract
In this paper we study some aspects of the question of international environmental regulation from a game theoretic perspective. We address two broad questions. First, we examine the circumstances under which the pursuit of unilateral environmental policy by a country in a Stackelberg game will make that country worse off. Second, we study the effects of environmental regulation by means of alternate price control instruments in a Stackelberg game where there is transboundary pollution. We find that there are plausible theoretical circumstances in which the pursuit of unilateral environmental policy is not a good idea. Further, we show that in choosing between alternate pollution control instruments, national governments typically face a tradeoff between instruments which correct more distortions but are costly to implement and instruments which correct fewer distortions but are less costly to implement. In particular, we obtain a dominance result for a tariff policy; this result favors the use of tariffs from an informational standpoint alone. Published in Annals of Regional Science 30 (2, 1996): 185-200.

Suggested Citation

  • Batabyal, Amitrajeet A., 1995. "Game Models Of Environmental Policy In An Open Economy," Economics Research Institute, ERI Study Papers 28364, Utah State University, Economics Department.
    • Handle: RePEc:ags:usuesp:28364
    DOI: 10.22004/ag.econ.28364
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    References listed on IDEAS

    as
    1. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
    2. Markusen James R. & Morey Edward R. & Olewiler Nancy D., 1993. "Environmental Policy when Market Structure and Plant Locations Are Endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 69-86, January.
    3. James R. MARKUSEN, 2021. "International Externalities And Optimal Tax Structures," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 16, pages 341-355, World Scientific Publishing Co. Pte. Ltd..
    4. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
    5. James A. Tobey, 1990. "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos, Wiley Blackwell, vol. 43(2), pages 191-209, May.
    6. Merrifield, John D., 1988. "The impact of selected abatement strategies on transnational pollution, the terms of trade, and factor rewards: A general equilibrium approach," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 259-284, September.
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    Citations

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    Cited by:

    1. Amitrajeet Batabyal, 1994. "On the possibility of attaining environmental and trade objectives simultaneously," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(6), pages 545-553, December.
    2. Yu Chen & Anthony G. O. Yeh & Yingxuan Zhang, 2017. "Political tournament and regional cooperation in China: a game theory approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(3), pages 597-622, May.
    3. Amitrajeet A. Batabyal & Dug Man Lee, 2008. "Dynamic Environmental Policy In Developing Countries With A Dual Economy," World Scientific Book Chapters, in: Dynamic And Stochastic Approaches To The Environment And Economic Development, chapter 10, pages 165-187, World Scientific Publishing Co. Pte. Ltd..
    4. Jeroen C.J.M. van den Bergh & Peter Nijkamp, 1997. "Optimal Growth, Coordination and Sustainability in the Spatial Economy," Tinbergen Institute Discussion Papers 97-104/3, Tinbergen Institute.
    5. Batabyal, Amitrajeet A., 1995. "Development, trade, and the environment: which way now?," Ecological Economics, Elsevier, vol. 13(2), pages 83-88, May.

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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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