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ID 35233
file
creator
subject
Offshoring
Intermediate input trade
Emission spillover
Environmental standard
Incomplete contract
JEL Classification Numbers: F12
JEL Classification Numbers: F13
JEL Classification Numbers: F18
JEL Classification Numbers: L24
JEL Classification Numbers: Q56
NDC
Social science
Pollution. Environmental engineering
abstract
This study develops a two-country model, Home and Foreign, with offshoring and environmental spillover. A final good producer in Home can produce (homogeneous) final goods using customized inputs produced by its partner-supplier in Foreign. The intermediate input price is determined by Nash bargaining, presenting a hold-up problem. Additionally, input production causes transboundary pollution. Home and Foreign governments can set trade taxes. Moreover, the Foreign government can set the environmental standard. This model demonstrates that, under no international policy agreement, both the environmental standard and the quantity of the intermediate input are lower than the first-best levels. This ine¢ ciency persists even if both governments conclude an agreement.
journal title
IDEC DP2 Series
volume
Volume 3
issue
Issue 8
start page
1
end page
33
date of issued
2013-12
publisher
広島大学大学院国際協力研究科
SelfDOI
language
eng
nii type
Departmental Bulletin Paper
HU type
Departmental Bulletin Papers
DCMI type
text
format
application/pdf
text version
publisher
department
Graduate School for International Development and Cooperation
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