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Conflict and cooperation on trade and the environment

By Paola Conconi


In the first part of this thesis, we examine the influence of green and producer lobbies on the determination of the trade and environmental policies adopted by large countries that are linked by trade flows and transboundary pollution. In Chapter 2, we show that the impact of green lobbying on the relative efficiency of unilateral and cooperative environmental policy outcomes depends crucially on the magnitude of the 'pollution leakages' and on the type of trade policy regime. Our analysis suggests that environmental policy coordination might be more beneficial under a free trade regime.\ud \ud In Chapter 3, we examine the case where both producer and environmental groups are organized. We find that the nature of the relationship between the two lobbies and the relative efficiency of alternative policy outcomes depend on the type of policy regime, whether governments act unilaterally or cooperatively, and the size of the 'pollution leakages' and the emission spillovers.\ud \ud The second part of the thesis looks at the formation of international trade and environmental agreements. In Chapter 4, we describe a model of multi-dimensional international negotiations, where countries can enter separate agreements with different partners along different policy dimensions. We examine the implications of negotiation tie-in - the requirement that agreements must span multiple dimensions of interaction - for the viability of multilateral cooperation, when countries are linked by international trade flows and transboundary pollution. We show that, while in some cases a tie-in rule has either no effect or can make multilateral cooperation more viable, in others it can make an otherwise viable joint multilateral agreement unstable.\ud \ud In Chapter 5, we examine international trade negotiations when markets are imperfectly competitive and governments use import tariffs and export subsidies to alter the strategic interaction between oligopolistic firms. Using a simple model of intra-industry trade between three ex-ante symmetric countries, we find that partial agreements involving the coordinated use of both tariffs and subsidies might be stumbling blocs against multilateral trade cooperation. We show that the introduction of an international ban on export subsidies might help to sustain global free trade. Chapter 6 contains some concluding remarks

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