Tariff reforms in the presence of pollution

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A number of countries are considering, mainly as part of their obligations under current treaties, domestic actions to internalize the social cost of pollution. One of the major obstacles, however, in those countries is the fear of jeopardizing their competitive position in world markets. A policy that has been repeatedly proposed to deal with this challenge is a tariff mitigating any distortions arising from cross-country differences in environmental policy. Such unilateral actions are the focus of this paper. It is argued that if a country set its pollution taxes optimally, cooperatively or non-cooperatively, there exist unilateral tariff reforms that improve global welfare.
Original languageEnglish
Pages (from-to)1-25
Number of pages25
JournalAgricultural Economics Review
Issue number2
Publication statusPublished - 31 Dec 2016

Bibliographical note

An earlier version of this paper was part of my PhD thesis conducted at the University of Exeter. I am grateful to the faculty of Economics, University of Exeter, for their support. Special thanks to Christos Kotsogiannis for introducing me to the issue of border tax adjustments and for his helpful comments and suggestions. I also thank Pascalis Raimondos Møller, Ben Zissimos and Michael Michael for their comments and suggestions as well as the participants in the ETSG 2013 and the Second Environmental Protection and Sustainability Forum: Towards Global Agreements on Environmental Protection and Sustainability 2015.


  • environmental taxation
  • tariff reforms
  • BTAs
  • international trade
  • Pareto efficiency
  • Pareto improving reforms
  • climate change


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