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Reforms of Environmental Policies in the Presence of Cross‐border Pollution and Public–Private Clean‐up *
Author(s) -
Hatzipanayotou Panos,
Lahiri Sajal,
Michael Michael S.
Publication year - 2005
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2005.00410.x
Subject(s) - scope (computer science) , economics , environmental policy , pollution , public economics , construct (python library) , private sector , production (economics) , public policy , economic policy , natural resource economics , macroeconomics , economic growth , ecology , computer science , biology , programming language
We construct a two‐country model where pollution from production is transmitted across borders. Pollution abatement is undertaken by both private producers and the public sector. We characterize Nash optimal levels of the policy instruments in the two countries: emission taxes and funds allocated for public abatement activities. We examine the implications of a number of multilateral policy reforms. One of our findings is that the magnitude of the beneficial effect of a reform depends on the scope of the reform; if it is restricted to a subset of policy instruments, then the efficacy of environmental policy reform can be greatly undermined.