38th Congress of the European Regional Science Association: "Europe Quo Vadis? - Regional Questions at the Turn of the Century", 28 August - 1 September 1998, Vienna, Austria
This paper presents a framework for analysing spatial aspects of environmental policies in the regulation of trans-boundary externalities. A spatial price equilibrium model for two regions is constructed, where interactions between these regions can occur via trade and transport, via mutual environmental spill-overs due to the externality that arises from production, and via tax competition when the regions do not behave cooperatively. Explicit attention is also given to the additional complications arising from emissions caused by the endogenous transport flows.