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North-south trade and the environment. (English) Zbl 0813.90012
Summary: A simple static model of North-South trade is developed to examine linkages between national income, pollution, and international trade. Two countries produce a continuum of goods, each differing in pollution intensity. We show that the higher income country chooses stronger environmental protection, and specializes in relatively clean goods. By isolating the scale, composition, and technique effects of international trade on pollution, we show that free trade increases world pollution; an increase in the rich North’s production possibility increases pollution, while similar growth in the poor South lowers pollution; and unilateral transfers from North to South reduce worldwide pollution.

MSC:
91B60 Trade models
91B76 Environmental economics (natural resource models, harvesting, pollution, etc.)
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