Antoniou, Fabio; Hatzipanayotou, Panos; Koundouri, Phoebe - Department of Land Economy, University of Cambridge - 2010
We construct a strategic trade model of an international duopoly, whereby production by exporting firms generates a local pollutant. Governments use environmental policies, i.e., an emissions standard or a tax, to control pollution and for rent shifting purposes. Contrary to their firm, however,...