Book contents
- Frontmatter
- Contents
- List of Tables
- List of Figures
- Preface
- Acknowledgments
- 1 Introduction and Plan of the Book
- Part 1 The Basics
- Part 2 Trade and Environment
- Note to Part 2
- 7 Trade and Environment: An Overview of Theory
- 8 Theory of Trade and Environment: A Diagrammatic Exposition
- 9 Theory of Policy: Partial Equilibrium, Terms of Trade, and Distributional Issues
- 10 Trade-Environment Policy: Evolution of the Debate and Taxonomy of the Issues
- 11 Institutional and Policy Responses: OECD, WTO/GATT, EU, and NAFTA
- 12 Empirical Studies
- Part 3 Transnational Pollution and Management of International Resources
- Part 4 Sustainable Development
- References
- Index
7 - Trade and Environment: An Overview of Theory
Published online by Cambridge University Press: 06 December 2010
- Frontmatter
- Contents
- List of Tables
- List of Figures
- Preface
- Acknowledgments
- 1 Introduction and Plan of the Book
- Part 1 The Basics
- Part 2 Trade and Environment
- Note to Part 2
- 7 Trade and Environment: An Overview of Theory
- 8 Theory of Trade and Environment: A Diagrammatic Exposition
- 9 Theory of Policy: Partial Equilibrium, Terms of Trade, and Distributional Issues
- 10 Trade-Environment Policy: Evolution of the Debate and Taxonomy of the Issues
- 11 Institutional and Policy Responses: OECD, WTO/GATT, EU, and NAFTA
- 12 Empirical Studies
- Part 3 Transnational Pollution and Management of International Resources
- Part 4 Sustainable Development
- References
- Index
Summary
Introduction
This chapter reviews trade models that include environmental resources and environmental policy. Our purpose is to explain how the environment has been fitted into trade theory and to describe some of the major conclusions. The presentation is more or less chronological but first makes some general observations about the environment and the theory of comparative advantage (Section 2). Early work through the mid-1980s was primarily concerned with modifying positive trade theory to incorporate environmental resources and drawing conclusions with respect to traditional trade theorems (Section 3). More recent work has a broader policy orientation: North-South trade-environment interactions and the effects of trade liberalization on the environment (Section 4) and trade-environment policy coordination (Section 5). The chapter continues with a discussion of the effects of lifting two restrictive conditions, the small-country, constant terms of trade assumption and the assumption of immobility of factors internationally (Section 6). Section 7 examines the integration of strategic trade theory and environmental policy.
Environment and Comparative Advantage
The theory of comparative advantage asserts that countries will tend to specialize in the production and export of goods they produce relatively efficiently. Relative efficiency involves a double comparison, as among goods and as among countries. In the Ricardian one-factor input model, the source of relative efficiency is not explicit but resides implicitly in differences among countries in factor productivities.
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- Economics and the Global Environment , pp. 172 - 199Publisher: Cambridge University PressPrint publication year: 2000