This paper illustrates that an international permit trading system may hurt relatively poor countries by making associated economic activities unaffordable. A model is constructed in which the free market solution is Pareto inefficient as a result of pollution. The introduction of tradable...

This paper proposes an answer to the question of why social unrest sometimes occurs in the wake of an IMF Structural Adjustment Program (SAP). Under certain circumstances, partly determined by a country’s comparative advantage, a nation’s elite may have an incentive to make transfers to the...

This paper shows how a world price shock can increase the likelihood that democratization must be used to resolve the threat of revolution. Initially, a ruling elite may be able to use trade policy to maintain political stability. But a world price shock can push the country into a situation...

This paper shows how a world price shock can increase the likelihood that democratization must be used to resolve the threat of revolution. Initially, a ruling elite may be able to use trade policy to maintain political stability. But a world price shock can push the country into a situation...

This paper develops a model of a trade agreement that puts at centre stage the competing interests between ?rms within a sector: Larger ?rms tend to be pro-trade liberalization whereas smaller ?rms favor protection. This set-up contrasts with the prior literature in economics that has tended to...

In a classic model of tax competition, this paper shows that the level of public good provision and taxation in a decentralized equilibrium can be efficient or inefficient with either too much or too little public good provision. The key is whether there exists a unilateral incentive to deviate...

We show that, in competition between a developed country and a developing country over environmental standards and taxes, the developing country may have a 'second-mover advantage.' In our model, firms do not unanimously prefer lower environmental-standard levels. We introduce this feature to an...