International Trade and the Environment: A Framework for Analysis

This paper sets out a general equilibrium pollution and trade model to provide a framework for examination of the trade and environment debate. The model contains as special cases a canonical pollution haven model as well as the standard Heckscher-Ohlin-Samuelson factor endowments model. We draw quite heavily from trade theory, but develop a simple pollution demand and supply system featuring marginal abatement cost and marginal damage schedules familiar to environmental economists. We have intentionally kept the model simple to facilitate extensions examining the environmental consequences of growth, the impact of trade liberalization, and strategic interaction between countries.

Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol

This paper demonstrates how three important results in environmental economics, true under mild conditions in closed economies, are false or need serious amendment in a world with international trade in goods. Since the three results we highlight have framed much of the ongoing discussion and research on the Kyoto protocol our viewpoint from trade theory suggests a re-examination may be in order. Specifically, we demonstrate that in an open trading world, but not in a closed economy setting: (1) unilateral emission reductions by the rich North can create self-interested emission reductions by the unconstrained poor South; (2) simple rules for allocating emission reductions across countries (such as uniform reductions) may well be efficient even if international trade in emission permits is not allowed; and (3) when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions.

Trade, Tragedy, and the Commons

We develop a theory of resource management where the degree to which countries escape the tragedy of the commons is endogenously determined and explicitly linked to changes in world prices and other possible effects of market integration. We show how changes in world prices can move some countries from de facto open access situations to ones where management replicates that of an unconstrained social planner. Not all countries can follow this path of institutional reform and we identify key country characteristics (mortality rates, resource growth rates, technology) to divide the world's set of resource rich countries into Hardin, Ostrom and Clark economies. Hardin economies are not able to manage their renewable resources at any world price, have zero rents and suffer from the tragedy of the commons. Ostrom economies exhibit de facto open access and zero rents for low resource prices, but can maintain a limited form of resource management at higher prices. Clark economies can implement fully efficient management and do so when resource prices are sufficiently high. The model shows heterogeneity in the success of resource management is to be expected, and neutral technological progress works to undermine the efficacy of property rights institutions.

A Simple Model of Trade, Capital Mobility, and the Environment

This paper examines the interaction between relative factor abundance and income-induced policy differences in determining the pattern of trade and the effect of trade liberalization on pollution. If a rich and capital abundant North trades with a poor and labor abundant South, then free trade lowers world pollution. Trade shifts the production of pollution intensive industries to the capital abundant North despite its stricter pollution regulations. Pollution levels rise in the North while those in the South fall. These results can be reversed however if the North-South income gap is "too large," in this case, the pattern of trade is driven by income-induced pollution policy differences across countries. Capital mobility may raise or lower world pollution depending on the pattern of trade.

Trade, Growth and the Environment

For the last ten years environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. The debate was originally fueled by negotiations over the North American Free Trade Agreement and the Uruguay round of GATT negotiations, both of which occurred at a time when concerns over global warming, species extinction and industrial pollution were rising. Recently it has been intensified by the creation of the World Trade Organization (WTO) and proposals for future rounds of trade negotiations. The debate has often been unproductive. It has been hampered by the lack of a common language and also suffered from little recourse to economic theory and empirical evidence. The purpose of this essay is set out what we currently know about the environmental consequences of economic growth and international trade. We critically review both theory and empirical work to answer three basic questions. What do we know about the relationship between international trade, economic growth and the environment? How can this evidence help us evaluate ongoing policy debates? Where do we go from here?

Is Free Trade Good for the Environment?

This paper sets out a theory of how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade's impact on pollution into scale, technique, and composition effects and then examine this theory using data on sulfur dioxide concentrations when it alters the composition, and hence the pollution intensity, of national output. Our estimates of the associated technique and scale efforts created by trade imply a net reduction in pollution from these sources. Combining our estimates of scale, composition, and technique efforts yields a somewhat surprising conclusion: freer trade appears to be good for the environment.

Engine Yaw Augmentation for Hybrid-Wing-Body Aircraft via Optimal Control Allocation Techniques

Asymmetric engine thrust was implemented in a hybrid-wing-body non-linear simulation to reduce the amount of aerodynamic surface deflection required for yaw stability and control. Hybrid-wing-body aircraft are especially susceptible to yaw surface deflection due to their decreased bare airframe yaw stability resulting from the lack of a large vertical tail aft of the center of gravity. Reduced surface deflection, especially for trim during cruise flight, could reduce the fuel consumption of future aircraft. Designed as an add-on, optimal control allocation techniques were used to create a control law that tracks total thrust and yaw moment commands with an emphasis on not degrading the baseline system. Implementation of engine yaw augmentation is shown and feasibility is demonstrated in simulation with a potential drag reduction of 2 to 4 percent. Future flight tests are planned to demonstrate feasibility in a flight environment

Flight Test of Orthogonal Square Wave Inputs for Hybrid-Wing-Body Parameter Estimation

As part of an effort to improve emissions, noise, and performance of next generation aircraft, it is expected that future aircraft will use distributed, multi-objective control effectors in a closed-loop flight control system. Correlation challenges associated with parameter estimation will arise with this expected aircraft configuration. The research presented in this paper focuses on addressing the correlation problem with an appropriate input design technique in order to determine individual control surface effectiveness. This technique was validated through flight-testing an 8.5-percent-scale hybrid-wing-body aircraft demonstrator at the NASA Dryden Flight Research Center (Edwards, California). An input design technique that uses mutually orthogonal square wave inputs for de-correlation of control surfaces is proposed. Flight-test results are compared with prior flight-test results for a different maneuver style

Trade, Spatial Separation, and the Environment

We develop a simple two-sector dynamic model to examine the effects of international trade in the presence of pollution-created cross- sectoral production externalities. We assume that the production of 'Smokestack' manufactures generates pollution, which lowers the productivity of an environmentally sensitive sector ('Farming'). As a result, the long run production set is non-convex. Pollution provides a motive for trade, since trade can spatially separate incompatible industries. Two identical, unregulated countries will gain from trade if the share of world income spent on Smokestack is high. In contrast, when the share of world income spent on the dirty good is low, trade can usher in a negatively reinforcing process of environmental degradation and real income loss for the exporter of Smokestack.

Vacuum Stability of Standard Model^{++}

The latest results of the ATLAS and CMS experiments point to a preferred narrow Higgs mass range (m_h \simeq 124 - 126 GeV) in which the effective potential of the Standard Model (SM) develops a vacuum instability at a scale 10^{9} -10^{11} GeV, with the precise scale depending on the precise value of the top quark mass and the strong coupling constant. Motivated by this experimental situation, we present here a detailed investigation about the stability of the SM^{++} vacuum, which is characterized by a simple extension of the SM obtained by adding to the scalar sector a complex SU(2) singlet that has the quantum numbers of the right-handed neutrino, H", and to the gauge sector an U(1) that is broken by the vacuum expectation value of H". We derive the complete set of renormalization group equations at one loop. We then pursue a numerical study of the system to determine the triviality and vacuum stability bounds, using a scan of 10^4 random set of points to fix the initial conditions. We show that, if there is no mixing in the scalar sector, the top Yukawa coupling drives the quartic Higgs coupling to negative values in the ultraviolet and, as for the SM, the effective potential develops an instability below the Planck scale. However, for a mixing angle -0.35 \alt \alpha \alt -0.02 or 0.01 \alt \alpha \alt 0.35, with the new scalar mass in the range 500 GeV \alt m_{h"} \alt 8 TeV, the SM^{++} ground state can be absolutely stable up to the Planck scale. These results are largely independent of TeV-scale free parameters in the model: the mass of the non-anomalous U(1) gauge boson and its branching fractions.Comment: 17 revtex pages, 8 figures; to be published in JHE