Trade and global pollution in dynamic oligopoly with corporate environmentalism

Akihiko Yanase

    Research output: Contribution to journalArticlepeer-review

    4 Citations (Scopus)

    Abstract

    This paper examines the effects of international trade in the presence of dynamic oligopolistic competition where the stock of global pollution has a negative welfare effect and the oligopolists' objectives may include society's pollution damage as well as private profits. In a symmetric case where the number of firms, emission coefficient, and firms' environmental consciousness are the same in two countries, an opening of trade unambiguously improves each country's welfare in the short run. In the long run, however, trade increases the stock of global pollution and hence, whether opening of trade is beneficial depends on the parameters of the economy. If there are asymmetries between countries, the short-run gains from trade in both countries are not necessarily guaranteed, because trade liberalization may increase output in one country and reduce it in the other. Moreover, free trade may result in lower pollution stock than under autarky.

    Original languageEnglish
    Pages (from-to)924-943
    Number of pages20
    JournalReview of International Economics
    Volume20
    Issue number5
    DOIs
    Publication statusPublished - 2012 Nov

    ASJC Scopus subject areas

    • Geography, Planning and Development
    • Development

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