Pollution,welfare, and environmental policy in the theory of Comparative Advantage |
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Authors: | Rüdiger Pethig |
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Institution: | 1. Center for Mathematical Studies in Economics and Management Science, Northwestern University, Evanston, Illinois 60201, USA;2. Fakultät für Volkswirtschafislehre und Statistik, University of Mannheim, 68 Mannheim, Seminargebäude in A5, West Germany |
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Abstract: | Within a simple two-sector general equilibrium model it is shown how some well-known propositions of the neoclassical trade theory can be applied to countries with pollution-generating industries. Results are obtained not only under the assumption that the countries do not enforce any environmental policy but also for the case that one or each country implements an environmental price and standard system. In particular, several versions of the Theorem of Comparative Advantage with respect to environmental scarcity are derived, a theorem on welfare losses from trade, and an emission charge equalization theorem. |
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