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Abstract

We study the co-ordination of environmental policy within an agreement in the context of international trade. In a-n country intra-industry trade model, firms produce a horizontally differentiated good and consumers have a taste for variety. Governments chose strategically an emmission tax and their membership in an international agreement. We show that only a strong taste for variety reduces the competition among governments sufficiently enough to to allow for some form of policy coordination, though full cooperation will never be obtained.
Original languageEnglish
Place of PublicationBath, U. K.
PublisherDepartment of Economics, University of Bath
Publication statusPublished - Feb 2017

Publication series

NameBath Economics Research Working Papers
Volume60/17

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  • Cite this

    Finus, M., & Al Khourdajie, A. (2017). Strategic Environmental Policy, International Trade and Self-enforcing Agreements: The Role of Consumers' Taste for Variety. (Bath Economics Research Working Papers; Vol. 60/17). Department of Economics, University of Bath.