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Agriculture 2018, 8(7), 108; https://doi.org/10.3390/agriculture8070108

The Conservation Effects of Trade with Imperfect Competition and Biased Policymakers

1
School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China
2
Department of Economics and Finance, University of Wyoming, Laramie, WY 82071, USA
3
Windesheim Honours College, Windesheim University of Applied Sciences, Zwolle 8017 CA, The Netherlands
4
Agricultural Economics and Rural Policy group, Wageningen University, Wageningen 6706 KN, The Netherlands
*
Author to whom correspondence should be addressed.
Received: 29 May 2018 / Revised: 20 June 2018 / Accepted: 27 June 2018 / Published: 5 July 2018
(This article belongs to the Special Issue Agriculture Policies: Experiences and Challenges)
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Abstract

In this paper, we study the effects of international trade on forest conservation and welfare in a two-country model with industry-biased policymakers and Cournot-competing firms. We find that opening up to trade increases the harvest taxes that the industry-biased governments impose compared to the autarky taxes. The tax increase is large enough to decrease the production levels, which leads to higher conservation levels. In addition, the numerical simulation predicts that increasing the industry-bias monotonically increases (i) the positive tax effect, (ii) the positive conservation effect, and (iii) the welfare gains from trade. The intuition behind the results is that industry-biased governments already degrade the environment under autarky, so even a highly-distorted trade outcome can be welfare-improving. We conclude that, even if industry bias decreases conservation, it does not have to increase the environmental costs of trade. View Full-Text
Keywords: environmental conservation; international trade; reciprocal dumping; race to the bottom; race to the top environmental conservation; international trade; reciprocal dumping; race to the bottom; race to the top
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Shao, Q.; Janus, T.; Punt, M.J.; Wesseler, J. The Conservation Effects of Trade with Imperfect Competition and Biased Policymakers. Agriculture 2018, 8, 108.

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