Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/31981
Authors: 
Stoschek, Barbara
Year of Publication: 
2007
Series/Report no.: 
CeGE Discussion Paper 65
Abstract: 
This paper uses a political-economy framework to analyze what consequences the exogenous introduction of a quantitative restriction on total emissions in a small open economy has on the stringency of domestic trade policy. The question is whether and to what extent the government, if it takes different lobby groups´ interests into consideration, has an incentive to compensate the polluting industry for stricter environmental regulations by granting higher protection to it. It turns out that the government will indeed tend to increase subsidization of the industry affected by environmental regulation. This compensation will even be more than complete as long as environmental interests are taken into account. Hence, contrary to what might be expected, a net benefit for the polluting sector arises from environmental restrictions.
Subjects: 
environmental regulations
international competitiveness
political
JEL: 
F18
Q52
Q58
Document Type: 
Working Paper

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