Yonezawa, Hidemichi; Balistreri, Edward J.; Kaffine, … - Division of Economics and Business, Colorado School of Mines - 2012
We consider a North-South trade model with cross-border environmental damage where the North imports the relatively dirty good. The North sets domestic production taxes according to each industry’s contribution to environmental degradation (Pigouvian taxes), but this exacerbates cross-border...