Gains from trade in a polluting product in the presence of transboundary stock pollution

This paper examines how the opening of trade affects a countryfs welfare in the context of an international polluting duopoly model with transboundary stock pollution. In this framework, we show that trade liberalization can have quite different welfare implications, depending on the mode of international competition and the magnitudes of international transportation coefficients of pollutant emissions and decay rates of pollutant stocks in respective countries, as well as on the values of other environmental and economic variables.