This thesis attempts to analyze some prominent linkages between trade and the environment. More specifically, the thesis seeks to elucidate the endogenous determination of environmental policies in the context of North-South and North-North relations when pollution generated in one country can cross the border and flow into another country. It also provides a theoretical framework to analyze the political influence of environmental lobbies on environmental policies, environmental damages, and the strategic behavior of domestic firms in making political contributions and investments in environmental R&D. This thesis adopts the political-support approach formalized with the help of the game-theoretic framework of a first-price menu auction formulated by Bernheim and Whinston (1986). In the political process, environmental interest groups that seek to influence environmental and trade policies set by politicians will face other lobby groups. By contrast, domestic firms in imperfectly competitive industries will press for protectionist trade policies and laxer environmental regulations. We find that an equilibrium emission tax depends on the cost and emission per unit of output, the weight that an incumbent government attaches to social welfare, the amount of pollution that countries transfer to each other, and the type of environmentalists. This thesis shows how interactions between different interest groups and their national governments may prevent the adoption of socially optimal levels of environmental policies. Moreover, it shows that environmentalists might be pressing for more stringent environmental policies if they care only about their own local environment and might have common cause with protectionist tendencies if they believe that liberalized trade will result in more pollution. With some exceptions, it is found that the presence of environmental lobbies improves the quality of their local environments. The exceptions arise when environmentalists also care about the global environment and pollution spills over from one country to another. This thesis shows that the presence of environmental lobbies may raise environmental R&D investments in the North, lower the profits of domestic firms, and improve the quality of their home and the world environments by inducing their incumbent government to adopt more stringent environmental policies. The thesis also finds that a more stringent environmental regulation, if properly set, may induce a domestic firm to undertake R&D investments, but it fails to confirm that this will raise the firm's profitability or competitiveness. Indeed, we show that an increase in a pollution tax causes the domestic firm to either cut back its output or raise its R&D expenditure. In either case, the profit of the domestic firm declines.
| Identifer | oai:union.ndltd.org:uottawa.ca/oai:ruor.uottawa.ca:10393/4224 |
| Date | January 1998 |
| Creators | Eslamloueyan, Karim. |
| Contributors | Quyen, N. V., |
| Publisher | University of Ottawa (Canada) |
| Source Sets | Université d’Ottawa |
| Detected Language | English |
| Type | Thesis |
| Format | 175 p. |
Page generated in 0.0125 seconds