We analyze the effects of a domestic standard that reduces an externality associated with the consumption of the good … can reduce expected damage associated with the externality by incurring a cost that varies by source of origin. Despite … potential protectionism, the standard is useful in correcting the consumption externality in the domestic country. Protectionism …

creates an opportunity to study how environmental regulation affects the location of economic activity, the externality costs …

externality continue to be critical determinants of the efficiency of prices relative to quantities, with flatter marginal … externality therefore weighs heavily in favor of price instruments for their control, so long as the optimal control falls short …