Trade and Environmental policies with Domestic and International Transportation (original) (raw)

2014

Abstract

In this paper, we construct a partial equilibrium trade model with oligopolistic domestic and international transportation sectors which are yielding emissions from their transportations. Foreign firms export a final good to a home country, but they have to use the international transportation from a port of the foreign country to a port of a home country and the domestic transportation from the port of the home country to a home market. Domestic firms use only a domestic transportation. The home government controls tariff and emission tax on the domestic transportation. We show that the optimal tariff and emission tax depends on the distances of domestic and international transportation and the numbers of home and foreign transportation firms.

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