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Environmental and trade policies: some methodological lessons*

Published online by Cambridge University Press:  31 July 2008

V. Kerry Smith  and
J. Andrès Espinosa
V. Kerry Smith
Affiliation:
Department of Economics, Box 90097, Duke University, Durham, NC 27708, USA
J. Andrès Espinosa
Affiliation:
American Express, 2630 North 25th Avenue, 4th Floor, Phoenix, AZ 85021, USA
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Abstract

This paper provides an overview of recent research on the interconnections between environmental and trade policies. It describes how the assumptions of these models can be important to the conclusions derived on the gains from coordination. The Harrison–Rutherford–Wooton CGE model of the European Union is used to illustrate the importance of these issues. This model was extended to include three air pollutants and their health effects as non-separable influences on household preferences in each region described by the model. The results suggest that the conventional assumption of separability in preferences between marketed and non-marketed goods is central to conclusions about the importance of coordination of these policies.

Type
Theory and Applications
Information
Environment and Development Economics , Volume 1 , Issue 1 , February 1996 , pp. 19 - 40
Copyright
Copyright © 1996, Cambridge University Press

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