A major concern in climate negotiations is that decarbonization may signi cantly hurt the development process. This paper shows that international specialization can contribute to making environmental and economic objectives compatible. When carbon effi ciency di ffers between two trading...

This paper analyzes the situation in which a national government introduces environmental regulations. Within the framework of an international duopoly with environmental regulations, this paper shows that an environmental tax imposed by the government in the home country can induce a foreign...

In this paper, we develop a two-country world differential game model with a polluting firm in each country where there is transportation cost to investigate the equilibrium of the game between firms when they decide to trade or not and to see under which conditions social welfare coincides with...

After the Paris Climate Agreement, it is anticipated that carbon prices will differ across regions for some time. If countries use free allowance allocation as carbon leakage protection, only a fraction of carbon prices are passed through to consumers particularly by carbon intensive materials...

The present paper analyzes the impact of a climate coalition's border carbon adjustment on emissions from commodity production, welfare and the coalition size. The coalition implements border carbon adjustment to reduce carbon leakage and to improve its terms of trade, while the fringe abstains...

A two-tier climate club exploits the comparative advantage of large countries to mete out punishments through trade, while taking their capacity to resist punishment as a constraint. Countries outside the coalition price carbon at a fixed fraction of the average carbon price adopted within the...

Relative prices determine competitiveness of different locations. In this paper, we focus on the role of regulatory differences between Germany and other EU countries which affect the shadow price of carbon emissions. We calibrate a Melitz-type model, extended by firms' emissions and abatement...

Online Technical Appendix to "Fighting Global Warming: Is Trade Policy in Latin America and the Caribbean a Help or a Hindrance?"It describes in more detail the data sources, the empirical strategy; and presents a series of robustness checks.

The dire prospects of global warming have been increasing the pressure on policymakers to use trade policy as a mitigation tool, challenging trade economists' canonical "targeting principle." Even though the justifications for this stance remain as valid as ever, it no longer seems feasible in a...

In a world where the prospects of a global agreement to control greenhouse gas emissions are bleak, the idea of using trade policy as an implicit regulation of foreign emission sources has gained many supporters in countries contemplating unilateral climate policies. Embodied carbon tariffs tax...