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  3. American Economic Journal: Economic Policy
  4. November 2016
  5. Trade Costs, CO2, and the Environment

Trade Costs, CO2, and the Environment

  • Joseph S. Shapiro
American Economic Journal: Economic Policy
vol. 8, no. 4, November 2016
(pp. 220-54)
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Abstract

This paper quantifies how international trade affects CO2 emissions and analyzes the welfare consequences of regulating the CO2 emissions from shipping. To this end, the paper describes a model of trade and the environment, compiles new data on the CO2 emissions from shipping, and estimates key parameters using panel data regressions. Results show that the benefits of international trade exceed trade's environmental costs due to CO2 emissions by two orders of magnitude. While proposed regional carbon taxes on the CO2 emissions from shipping would increase global welfare and increase the implementing region's GDP, they would also harm poor countries.

Citation

Shapiro, Joseph S. 2016. "Trade Costs, CO2, and the Environment." American Economic Journal: Economic Policy, 8 (4): 220-54. DOI: 10.1257/pol.20150168

Additional Materials

JEL Classification

  • F18 Trade and Environment
  • H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • H87 International Fiscal Issues; International Public Goods
  • L92 Railroads and Other Surface Transportation
  • Q54 Climate; Natural Disasters and Their Management; Global Warming
  • Q56 Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
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