Abstract
This paper analyzes the political economy of environmental-policy formation in a trading economy with established rules for administered protection. We argue that the social costs associated with the adoption of an inefficient environmental regime are likely to be compounded by induced restrictions on trade when the effected industries are import competing. The preferences of interest groups for alternative environmental regimes tend to be linked to the legal-institutional setting in which trade policy is conducted. Under existing rules and practices in the area of administered protection, there is reason to believe that interest group preferences for an inefficient approach to pollution control will be strengthened because the adoption of such a regime is more likely to lead to a concomitant increase in trade barriers.
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We thank Kym Anderson, Richard Blackhurst, Peter Lloyd, Richard Snape, John Whalley, Alan Winters and participants in a GATT workshop on trade and the environment for helpful comments on an early draft of this paper. We are also indebted to an anonymous referee for several constructive suggestions. The views expressed are our own and should not be attributed to the GATT Secretariat or the IMF.
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Leidy, M.P., Hoekman, B.M. ‘Cleaning up’ while cleaning up? Pollution abatement, interest groups and contingent trade policies. Public Choice 78, 241–258 (1994). https://doi.org/10.1007/BF01047757
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DOI: https://doi.org/10.1007/BF01047757