Premium
The Political Economy of Trade Liberalization and Environmental Policy
Author(s) -
Fredriksson Per G.
Publication year - 1999
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.1999.tb00173.x
Subject(s) - ceteris paribus , economics , tax revenue , free trade , politics , revenue , liberalization , pollution , environmental tax , international economics , tax reform , economic policy , macroeconomics , market economy , political science , microeconomics , finance , law , ecology , biology
A pressure group model where environmental and industry lobby groups offer political support in return for favorable pollution tax policies is used to explain and predict the equilibrium pollution tax in sectors protected by tariffs. The political economy effects of trade liberalization are investigated. The pollution tax is shown to decrease if the lobbying effort by the environmental lobby decreases more rapidly than by the industry lobby ceteris paribus. The level of political conflict falls with trade liberalization. Pollution may increase because of a reduction of the pollution tax, and tax revenues may fall simultaneously as pollution increases.