Economic Analysis of the Environment and Trade (2)
- Cross-border or global environmental problems and trade -

Author Name YAMASHITA Kazuhito  (Senior Fellow, RIETI)
Creation Date/NO. October 2009 09-J-029
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In this discussion paper, we analyze the following issues with regard to the environment and trade.

(1) What kind of consideration will be necessary for the case in which external diseconomies such as pollution are cross-border, or global, in comparison with the case in which external diseconomies are local?

(2) It is generally said that the emissions tax and the trading of emissions quotas have the same effect and that the emissions tax is more desirable if the double dividend of the tax is taken into account. However, even under an open economy in which trade can take place, do the equivalence of the emissions tax and emissions trading, as well as the advantage of the emissions tax, reasonably apply? What are more desirable environmental policies under an open economy?

(3) Although technologies that reduce the pollution intensity of pollution goods seem desirable from a common sense perspective, does the non-pollution-intensive technological progress of pollution goods improve a country's economic welfare? What kinds of technological progress are desirable under an open economy?