Welfare and Trade Effects of International Environmental Agreements

Catia Montagna, Avanti Pinto, Nikolaos Vlassis

    Research output: Contribution to journalArticlepeer-review


    We analyse the welfare effects of environmental policy arising from the formation of an international environmental agreement on the participating and non-participating countries and thus shed light on the potential incentives for a country to join such an agreement. Within a N-country Q-goods general equilibrium framework under free-trade conditions, we consider unilateral and cooperative policy settings and, within the latter, country-specific and fully harmonized policies within the agreement. A key result of the paper is the emergence of a negative relationship, arising from terms of trade effects, between the welfare changes of the participating and non-participating countries following the formation of the agreement. These however do not result in a zero sum welfare outcome for the world as a whole.
    Original languageEnglish
    Pages (from-to)331-345
    Number of pages15
    JournalEnvironmental and Resource Economics
    Issue number2-3
    Publication statusPublished - 7 Jun 2020

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    • International Environmental Agreements
    • Environmental taxation
    • Climate Change
    • Trade
    • Pareto improving reforms
    • Pareto efficiency
    • Climate change
    • International environmental agreements
    • International trade


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