Year: 2001
Type: article
Abstract: We analyze environmental policy in a two country world in which national governments and polluting firms behave strategically. Two general issues are examined. First, we specify the conditions under which the pursuit of one-sided environmental policy by a country in a Bertrand game, will immiserize that country. Second, we examine the effects of pollution control by means of alternate price control instruments in a Bertrand game in which national governments care about global pollution but polluting firms do not. We find that there are reasonable circumstances in which the conduct of one-sided environmental policy is immiserizing. Next, we show that when the two countries are similar, the joint policy instrument is the most desirable pollution control instrument. However, when the two countries are dissimilar, there is no clear answer as to which control instrument is the most desirable.
Authors: Qing Xu, Amitrajeet A. Batabyal
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W29165245