Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75556
Authors: 
Hatzipanayotou, Panos
Lahiri, Sajal
Michael, Michael S.
Year of Publication: 
2000
Series/Report no.: 
CESifo Working Paper 360
Abstract: 
We develop a North-South model of foreign aid and cross-border pollution resulting from production activities in the recipient country. There is both private and public abatement of pollution, the latter being financed through emissions tax revenue and foreign aid. We characterise a Nash equilibrium where the donor country chooses the amount of aid, and the recipient chooses the fraction of aid allocated to pollution abatement and/or the emission tax rate. At this equilibrium, an increase in the donor's perceived rate of cross-border pollution reduces net emission levels.
Subjects: 
Cross-border pollution
pollution abatement
foreign aid
Document Type: 
Working Paper

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