Publication Date


Series Number

99-WP 209


The design of trade and environmental policy pays increasing attention to consumption-induced pollution linked to trade liberalization. The authors of this paper incorporate endogenous consumption pollution into a dual trade model to assess the welfare elects of coordinated trade and environmental piece-meal reform in a small, open and distorted economy They identify sufficient conditions for welfare-improving reforms of trade and environmental policies. They also discuss briefly the implications of using tradable permits instead of taxes.