Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96868
Authors: 
Fredriksson, Per G.
Matschke, Xenia
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4717
Abstract: 
The literature on trade liberalization and environment has not considered federal structures. This paper shows how the design of environmental policy in a federal system has implications for the effects of trade reform. Trade liberalization leads to a decline in pollution taxes regardless of whether pollution taxes are set at the federal (centralized) or local (decentralized) level, and it increases social welfare. The effect under a decentralized system is smaller than if these taxes are set by the federal government, and pollution emissions therefore decline in this case. Moreover, majority bias interacts with trade liberalization if federal taxes are used.
Subjects: 
trade and environment
environmental policy
trade liberalization
environmental federalism
political economy
majority bias
social welfare
JEL: 
F10
H20
H70
Q20
Document Type: 
Working Paper

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