We analyze a dynamic model of environmental policy in a stylized developing country (DC) with a dual economy. This DC’s economy is distorted because the government subsidizes the exports of the non-polluting sector of the economy. We analyze the employment and output effects of three different...

We first review the literature pertaining to the protection of the modern sector in developing countries (DCs). We then discuss the nexuses between protection, economic dualism, and optimal environmental policy in DCs. Next, in the theoretical part of the paper, we construct a dynamic model of...

We first review the literature pertaining to the protection of the modern sector in developing countries (DCs). We then discuss the nexuses between protection, economic dualism, and optimal environmental policy in DCs. Next, in the theoretical part of the paper, we construct a dynamic model of...