Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154990
Authors: 
Bigano, Andrea
Year of Publication: 
1999
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 36.1999
Abstract: 
In this paper we extend a model by A. Ulph (1997) on the relationship between free trade agreements, environmental regulation and trade under imperfect competition. Ulph's model focused on the effectiveness of harmonisation policies against ecological dumping. It turned out that harmonised policies are rarely optimal under perfect information, but some rationale for them is granted when asymmetric information between the Commission and national governments is considered. This paper analyses two extensions of that model: transboundary pollution and the inclusion of consumer's surplus. Our interest in these issues rests in their importance for the environmental regulation of the European electricity sector, where imperfect competition can be expected to prevail even after the opening of the Single Market. Allowing for consumers' surplus has a very limited impact on Ulph's conclusions, but considering transboundary pollution has important consequences. Under perfect information, it makes harmonisation a much more attractive option. Under asymmetric information, it affects the governments' incentives to misreport, making them stronger and changing the kind of report the Commission should be wary of, it calls for a much less differentiated treatment of the countries, and makes delegating the regulatory power to the Commission a more attractive option than acting non co-operatively.
Subjects: 
Environmental policy
International trade
Imperfect competition
Asymmetric information
Electricity
JEL: 
D43
D82
F1
Q2
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.