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Globalization, cross-border pollution and welfare

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We construct a two-good general equilibrium model of international trade for two small open economies where pollution from production is transmitted across borders. Governments in both countries impose emission taxes non-cooperatively. Within this framework, we examine the effect of trade liberalization and of changes in the perception of cross-border pollution on Nash emission taxes, emission levels, and welfare.

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Panos Hatzipanayotou, Sajal Lahiri, Michael S. Michael

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Adapt according to the presented license agreement and reference the original author.