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| Author: | Karp, L. Zhao, J. Sacheti, S. |
| Title: | The Long-Run Effects of Environmental Reform in Open Economies |
| Journal: | Journal of Environmental Economics and Management
2003 : MAR, VOL. 45:2, p. 246-264 |
| Index terms: | TRADE ENVIRONMENT POLICY |
| Language: | eng |
| Abstract: | The authors compare the short- and long-run effects of environmental reform and harmonization under autarky and free trade. When trade is driven by environmental distortions rather than real relative advantages, harmonization of environmental policies, even if achieved by lowering standards in one country, can improve short-run aggregate welfare. With the possibility of multiple steady states, harmonization can improve long-run welfare, especially when the environment is fragile. Further, long-run considerations favor upward harmonization even when it is equivalent to downward harmonization in the short run. For a country trapped in a low (or bad) steady state, environmental reform may not move it to a high (or good) steady state under autarky. |
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