Open AccessENVIRONMENTAL POLLUTION AND UNILATERAL CONTROL IN AN OPEN ECONOMY
Author(s) -
Batabyal Amitrajeet A.
Publication year - 1991
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1991.tb00256.x
Subject(s) - stylized fact , externality , dimension (graph theory) , economics , context (archaeology) , environmental policy , general equilibrium theory , perspective (graphical) , open economy , simple (philosophy) , control (management) , empirical evidence , public economics , macroeconomics , microeconomics , environmental economics , computer science , paleontology , philosophy , mathematics , management , epistemology , artificial intelligence , biology , exchange rate , pure mathematics
In this paper we study two questions in environmental economics. First, within the context of a simple 2 × 2 × 2 static general equilibrium model, we seek to determine the conditions under which environmental policy, pursued unilaterally by a large country will make that country worse off. The empirical dimension of this question is stressed, and the key parameters which are germane to any policy discussion regarding this issue are identified. Second, we study—once again from the perspective of a large country—the possibility of using the domestic tax structure optimally to attain environmental policy objectives. Keeping the empirical dimension of the question in mind, we show how to compute optimal externality correcting taxes. We then briefly focus on the links between our stylized analytical model and the applied general equilibrium models currently being developed to study the effects of environmental policy quantitatively.