Academic journal article International Journal of Management

Relations between Free Trade and Economic Protection: A Game Theory Analysis

Academic journal article International Journal of Management

Relations between Free Trade and Economic Protection: A Game Theory Analysis

Article excerpt

According to public opinion about free trade and environmental protection, there is no necessary contradiction between the two, at least as mutual policies between countries. However, the fact that theoretical discussions often do not reflect reality frequently leads to stalemate between trade and environment in the international arena. With this as a starting background, the present investigation identifies a number of distinct ways in which countries can pursue policies-of free trade and environmental protection-which do not harm and can sometimes benefit each other, using game theory analysis. It also analyzed the strategies adopted by players (countries) involved in international cooperation efforts when they are motivated by self-interest. Using this analysis, this study examined the pollution control methods outlined by the international trade agreement, as an example. The results of the game theory analysis suggest that trade issues and environment issues can be solved more effectively when environment issues are explicitly included in trade liberalization negotiations.

(ProQuest: ... denotes formulae omitted.)


Anumber of developing nations 'adjusted' their economic development strategies in the 1980s, with most adopting trade liberalization strategies from that time (Telle and Larsson, 2007). Trade entails sustainable development as its foundation including natural resources and ecology. However, environment and natural resources are extremely different from private properties. People always overlook or underestimate the environment and then blame the "incapability" of market and government. Therefore, more and more environment protection issues arise as trade liberalization continues to develop. It is important to note here that the eco-awareness has caused the world to be concerned with trade-related issues as well environment and sustainable development issues. Trade globalization accelerates economic development and imposes severe impacts to the environment. The depletion of natural resources and import/export of perilous wastes damage the global environment. It is also important to note that environment issues are inseparable from trade issues. At the time that environment issues are more important than ever, economic development globalization and environment protection globalization are equally important for the world. GATT/WTO has to deal with trade policies, environment policies, and sustainable development simultaneously.

Many topics and issues are involved in the coordination between trade liberalization and environment protection (Kathuria, 2007; Levinson and Taylor, 2008). A number of methods were designed to examine trade liberalization and environment protection from various aspects. Secondly, it is unlikely to establish an authoritative environment protection agency to oversee the international trade liberalization and environment protection affairs in the coming future. Thirdly, WTO has included many topics into the trade liberalization agenda including services, intellectual properties, investment, and so on. As a result, more and more environment protection issues are involved in the trade liberalization negotiations. Presently, free trade advocates are debating with environment protectionists while multi-trade systems contradict multi-environment treaties and unilateral environment protection measures causing paradoxes between the developed nations and developing nations. Furthermore, WTP Doha-Round's ministerial meeting has agreed to include environment protection issues into agenda. Therefore, how to maintain the harmony between trade liberalization and environment protection, especially the balance and continuity between trade liberalization and environment protection, has to be solved urgently and is therefore Hie motive behind this study.

Based on the bundled solutions for trade and environment proposed by Hansen (1999), this study employed game theory to identify the issues between trade and environment for the purposes stated hereunder:

(1) Using game theory to examine the possibility of including environment issues into trade negotiations; and

(2) Examining the impasse confronting the coordination between trade and environment.

Literature review

Disputes between trade and environment

There were two major debates on the relationship between trade and environment. The first major debate occurred in 1970s when Baumöl (1971), Magee and Ford (1972), and Walter (1973) presented their papers on trade and environment issues. The second debate took place in 1 99Os when Dean (1 992), Beghin and Potier (1997) publicized their reviews on trade and environment issues. Ekins et al. (1994) edited a special report on trade and environment for Ecological Economics. Van Beers and Van den Bergh (1996) examined the relationship between trade and environment from methodology standpoint. Lee (1996) summarized and analyzed 79 issues of trade and environment using empirical data to disclose the complicated relationship between trade and environment. Antweiler, Copeland and Tayor (2001), Ederington and Minier (2003) studied the in-depth of trade and environment issues, respectively.

Two contradictory viewpoints on the relationship between trade and environment

Some economists presented Environmental Kuznets Curve, EKC) explaining the sum of structure effect and technology effect larger than scale effect when revenue reaches certain level. In the long-run, trade liberalization causes revenue to increase. When income reaches a certain level, people increase their spending in environment improvement (Bhagwati, 1993; Grossman and Krueger, 1995; Lopez, 1994; Lucas, Hettige and Wheeler, 1992; World Bank, 1992; Tseng, Mei-ping 2009). Some economists and researchers examined the developing nations' trade and environment. They concluded that the open policy advocated by trade liberalization is beneficial to environment. For example, Lucas et al. (1992) noted that some developing nations expanded their pollution-intensive industries substantially in 1960-1988 and later on decreased their pollutant emission. Birdsall and Wheeler (1 992) noted the relationship between liberalization (measured by trade system and foreign investment) and development of the pollution-intensive industries in Latin America. Once trade is liberated (e.g. the ban on technical transfer and foreign capital being lifted), the developing nations are likely to implement the environment standards adopted by the industrialized nations. As a result, the economy-liberated nations develop eco-friendly production techniques faster than other nations. Anderson (1992) noted the same after he studied the worldwide food industry and coal industry. Antweiler et al. (2001) concluded the same as EKC after they examined the influence on environment quality imposed by trade liberalization.

Environment control and international competitiveness

No one can overlook the environmental consequences caused by free trade and regional trade. The influence on trade imposed by environment cannot be underestimated, either. Environment affects not only international competitiveness, but the direct investment made by foreign investors, and thereby influences trade patterns, industrial operation, etc. Up until now, however, academia has not reached consensus for the issues stated above. Moreover, the international academia has formed two different viewpoints as to the influence on international competitiveness imposed by the environment control.

The conventional position is that environment control would downgrade the domestic enterprises' international competitiveness, and that a higher environment standard would trigger production costs to soar and thereby reduce international competitiveness; secondly, the environment revenue (e.g. the improvement of environment quality) arising from the strict environment control was likely to be less than the loss caused by the domestic markets conceded to foreign competitors. Therefore, the conventional school believed that higher environment standards cause more damage than revenue. Palmer (1999) and Simpson and Bradford (1996) analyzed the conventional school's theory and concluded that the theory stressed the loss of efficiency while overlooked the improvement of environment quality.

Trade policy adjustment and environment protection issues

Faced with the cross-border pollution, the pollution-receiving nations impose sewage charge on the pollution-originating nations regardless of the International Pigou Tax (IPT) imposed by international institutions for the benefits of the world. According to the environment economics, trade policy is a feasible solution to cross-border pollution control. Baumöl and Oates (1989) studied the reduction of cross-border pollution by tariff. If a nation causes cross-border pollution, the importing-nation imposes tax on the goods imported from the pollution-originating nation. However, IPT is unlikely to create pareto optimal. The sewage charge designed to protect environment is likely to cause trade conflicts. Nonetheless, once sewage charge is imposed, the pollution-receiving nation and pollution-originating nation often resort to negotiations in order to solve their disputes. Snape (1989) explained the scenario by a clear-cut chart in which excise tax is the most appropriate policy for the cross-border pollution-receiving nation. Merrifield (1989) constructed a general equilibrium model to analyze the cross-border pollution. The model included two strategies - sewage charge and pollution-reduction standard. He concluded that a strict pollution-reduction standard was sufficient to reduce crossborder pollution, while the aftermath of tax policy remained uncertain and was likely to increase pollution.

Game theory analysis

All nations agree that environment protection is most important and understand that the environment cost internalization ensures environment protection. Ironically, cross-border pollutions cause externality to expand. Apparently, governments lack concrete measures to solve the externality created by domestic industries against foreign nations. As far as pollution-reduction is concerned, governments must resort to international cooperation in order to solve the cross-border externality caused by environment pollutions.

Theoretical foundation for the coordination between trade and environment

If the pollution-reductions' marginal costs and marginal revenue are given, it is possible to prove a full cooperation is the optimal solution and serves the world's best interest. In such case, the pollution-reduction costs and the damages caused by pollutions are minimal. Usually, pollution-reduction is a public property. Therefore:

... (1)

In the equation, the total sum of n nations' marginal damage costs (MAC ) equals the marginal control costs (MA C) of every nation. In addition, MAC represents the marginal revenue produced by pollution-reduction. Therefore, equation (1) implies that, assuming pollution-reduction a public property, the total sum of all nations' marginal revenue equals the marginal pollution-reduction costs of every nation. Assume MA C and MA C are linear functions as shown by Fig. 1, cooperation leads to pp ' . Therefore, all nations set their MAC as the marginal revenue produced by the global pollutionreduction (MDC) (Bartlett, 1994).

It is important to note that the increase of worldwide benefits does not imply every nation's benefits to increase. Some nations probably do not benefit from pollution-reduction (For example, a nation uses eco-friendly energy instead of coals. However, it pays more than the benefits created by the improvement of environment). If benefit-receiving nations do not reimburse the damage- occurring nations for the loss arising from pollution (i.e. compensation), the foregoing equation is unable to provide a solution for equilibrium. In such case, nation n is likely to choose non-cooperation for its benefits. Every nation acts selfishly and thereby leads to Nash equilibrium. Every nation's MA C equals its MAC , indicating the optimal reaction taken by that nation in response to the selfish moves taken by all other nations.

MDC^sub n^=MAC^sub n^ - n = 1,2,..., N (2)

In Fig. 1, ^denotes parete suboptimal solution, opposed to the solution obtained from full cooperation, wherein every nation's marginal damage costs equal its marginal pollution-reduction costs, or Qn

The analysis stated above provides a theoretical possibility for the international environment cooperation. In reality, however, there are some unsurpassable obstacles. In the first place, the model assumes all nations have full knowledge about the pollutionreduction's marginal revenue and marginal costs. The knowledge serves as not only the basis of the model, but the prerequisite condition for the unilateral payment. Unfortunately, it is extremely difficult to prove the knowledge in the real world. Moreover, it is very difficult to identify the guideline governing the unilateral payment and transferal payment mechanism. Therefore, people do not hold an optimistic view in this regard. According to the two possibilities proposed by Barrett (1994), allocation is to be made in accordance with a nation's population or the level of cooperation taken by every nation. Without the presence of a "world government" above all nations and without any punishment or incentive, all nations are likely to act selfishly.

The international environment cooperation forums, dedicated to solve the issues related to climate changes, are currently attempting to resolve environment issues together with trade liberalization. Trade liberalization entails elimination of discrimination and compromise. All parties' understandings are needed to reach a multiple or regional trade agreement. If one party is expected to give in, other parties are motivated to compromise. If the opponent is unlikely to reduce its price, other parties are likely to give in, either. In the analysis of trade liberalization negotiation, both players' strategies and behaviors are defined as assurance problem (AP) from the game standpoint. AP leads to two possible equilibriums - a successful negotiation with compromise and a failed negotiation. However, it is important to note that pareto optimal solution can be attained for both players' benefits, even if trade is not liberated entirely.

The rivalry between international trade and environment cooperation is a classic example of Prisoners' Dilemma (PD)1. External strength is needed to solve environment issues; players are forced to cooperate compulsorily. Without the presence of an enforcement agency above nations, international environment cooperation is unattainable. No player is willing to provide public property at all. According to the bundled solution devised by Hansen (1999) for trade and environment issues, this study applied game theory methods to examine the possibility of including environment issues into trade negotiations.

I. Constructing model

As shown by Fig. 2, V^sup i^^sub jk^ and V^sup i^^sub jk^ denote the payments for the games in which superscript represents player i= 1,2 , subscript c denotes cooperation and d represents betrayal, first alphabet/ represents the strategy adopted by player 1 , second alphabet k represents the strategy adopted by player 2. The payoff matrix is illustrated as follows:

... (3)

Following equation represents the cooperation payoff matrix being included into trade model:

... (4)

Optimal strategy is obvious: remove trade barriers to enhance two-way trades. To imitate the real scenario, assume there are two Nash Equilibriums in AP; one of the equilibriums represents trade protection from each other while the other represents trade liberated for each other. The mutual trade liberation is beneficial to both players.

When AP involves a mixed strategy, π^sub c^ denotes the probability of nation 1 adopting cooperative strategy. When nation 1 adopts cooperative strategy, π^sub c^ denotes the probability of nation 2 adopting cooperative strategy. (1 - ps} and (1 - ps) represent lhe probabilities of nation 1 and nation 2 adopting betrayal strategy, respectively. Assume the expected cooperation payment equals the expected betrayal payment, probability is calculated through #"c . The probability of nation 2 can be calculated by following equation:

... (5)

Wherein π^sub c^ denotes the payments earned from cooperation, π^sub c^ represents the payments earned from betrayal, and π^sub c^ denotes the probability of nation 1 adopting cooperative strategy in the trade game. If the probability of nation 1 adopting cooperative strategy is larger than π^sub c^, nation 2 adopts cooperative strategy, too. Probability π^sub c^ reveals the moves to be taken by players throughout the game. For example, nation 1 knows the probability of nation 2's removal of trade barrier is larger than Tt c , nation 1 is most likely to remove its trade barrier, too. Cooperation between international trade and environment can be considered a simple game involving two players as opposed to a trade game in which PD denotes the payment matrix (p^sup p^ and p^sup p^ denote the probabilities of nation 1 and nation 2 adopting cooperative strategy, respectively).

Payment matrix (PD):

... (6)

The equations indicate that players reduce pollutions to obtain benefits and other players act as free riders to obtain benefits without reducing pollution.

Joint game between trade and environment

At first, combine both games together. Then, use the revenue obtained from trade game and the motivation structure of environment game to relieve environment from prisoner's dilemma (PD) and thereby facilitate the analysis the bundled solution for environment issues and trade negotiations.

Pareto optimal solution requires both players to change the environment PD by the revenue obtained from trade game. Similarly, whichever player chooses betrayal will cause other player to choose betrayal. Once the games are combined, cooperation reaches strategic equilibrium "liberate trade - control pollution" while betrayal reaches strategic equilibrium "restrict trade - emit pollution". 2 Then, the payments made by both games respectively are added to obtain a combined game.

The combined game is described in this paragraph. Assume trade game as AP and environment game as PD. 3The game leads to either PD or AP. If the benefits obtained from trade game are sufficient to offset the benefits obtained by alleviating pollution control from environment game, then:

... (7)

The combined trade and environment game leads to AP. If the former is not sufficient to offset the later, the combined game leads to PD. Apparently, no player earns any benefit when environment protection and trade are combined, because the potential trade benefit decreases at the time that trade and PD-featured environment game are combined. The scenario implies the following: the revenue obtained from mutual trade liberalization has to be larger than the costs of the public goods in the environment. If not, the combination of trade and environment causes threats to trade liberalization and the combination itself is unable to solve the environment issues. Therefore, following criterion has to be included into consideration: after games are combined, both players choose their strategies based on the opponents' willingness for cooperation.

Let p^sup e^ be the probability of nation 1 adopting cooperative strategy in the combined game, then:

... (8)

Find solution from following equation:

... (9)

Wherein PD is a prerequisite condition, (U^sup 2^^sub cc^ + V^sup 2^^sub cc^) > V^sup 2^^sub cd^ and (V^sup 2^^sub cc^ - V^sup 2^^sub cd^) < 0

(PD payment assumption), either of (10) equations sustain:

... (10)

Equation (10) indicates: p^sup c^ > p^sup s^ (11)

According to the foregoing analysis, when environment issues are included into trade liberalization negotiation agenda, both trade issues and environment issues are likely to be solved. When trade and environment are combined, however, the issues become complicated, because the combination highlights the contradiction and disputes between the developed nations and the developing nations.

The distribution of benefits between the developed nations and developing nations

International community resolves the issues related to environment protection and trade liberalization through negotiations in order to upgrade benefits for all parties concerned. The benefit distribution mechanism is discussed in this paragraph. Different income levels are satisfied with different levels of environment quality. The benefits of environment protection are distributed to the advantage of thee developed nations. In following equation, nation 1 denotes the developing nations and nation 2 represents the developed nations. Assume both players obtain less trade liberalization benefits than before and pollution-reduction costs are higher than the maximum costs born by the developing nations, then:

... (12)

Nation 1 refuses the motivation associated with cooperative strategy throughout the environment game. 4 Assume nation 1 earns more pollution-reduction benefits, nation 2 urges the environment topics to be included into trade liberalization negotiation agenda and stresses the trade not to be bundled with environment issues. Thus, nation 1 is pushed to take a cooperative stance in the environment issues and eventually sign "a series of agreements. Therefore, following condition has to be satisfied in order to produce "commitments" based on the threats 5:

(v^sup 1^^sub cc^ + U^sup 1^^sub cc^) > V^sup 1^^sub dc^ ≥ 0 (13)

Following is another assumption: nation 1 expects the developing nations to adopt "liberate trade - emit pollution" strategy. Therefore, nation 2 conveys a message to nation 1, saying nation 2 will adopt "restrict trade - emit pollution" strategy if its opponent adopts "liberate trade - emit pollution" strategy. When nation 2 promises to "restrict trade - emit pollution" strategy, nation 1 will most likely choose "liberate trade - control pollution" strategy as shown by Fig. 3.

Following is a possible solution: nation 1 earns less pollution-reduction benefits than nation 2 does. Therefore, nation 1 refuses the environment issues to be bundled with trade negotiation and chooses "liberate trade - emit pollution" strategy. In such case, nation 2 will most likely choose not to cooperate in the trade negotiations in order to threaten nation 1 . If nation 1 feels the threats absurd, the most feasible strategy is combine trade and environment together although that strategy is unlikely to maximize the short-term benefits for nation 1. Nonetheless, nation 1 has to choose the second best strategy in order not to lose the benefits produced by trade liberation any more.

The reality

From theoretical standpoint, trade issues and environment issues can be solved simultaneously when environment issues and trade liberalization are included into negotiation agenda. In light of the symmetric trade issues and environment issues, however, the model is unlikely to serve the real issues at this moment. Moreover, without an effective and unbiased coordination mechanism, the model is far from perfect.

Asymmetric relationship between the developed nations and the developing nations

For the developed nations and the developing nations, the relationship between environment protection and trade liberalization is asymmetric. Trade liberalization improves environment quality. However, the improvement varies from nation to nation. Trade liberalization upgrades environment quality for the developed nations substantially. Unfortunately, trade liberalization imposes negative influence on the environment quality of the developing nations. Secondly, the growth path differs from nation to nation. Although the correlation between environment quality and economic growth appears to be negative, the relationship between environment quality and growth path is not unchangeable. Economic growth destructs environment, regardless of high growth, low growth or negative growth6. Nonetheless, it is possible to maintain high economic growth and minimize environmental destruction at the same time. Structural effect and technical effect are sufficient to offset the negative influence imposed by scale effect. The developing nations' trade growth policies contradict their sustainable development policies more or less. A number of factors cause the asymmetry, such as economic and technical difference, resource endowment difference, the biased structure between consumption and trade, and the unfairness in the international arena.

Using the concepts and calculation methods of "real domestic saving rate" 7, World Bank (2000) concluded the developing nations' saving rate 25% in 1997. However, the real domestic saving rate was mere 14% when the excessive exploitation was excluded from the saving rate. Therefore, the developing nations' economic growth quality is considerably lower than average. Apparently, the developing nations' ecological environment will be destructed if trade liberalization is measured by nothing but economic efficiency.

Unfairness in the international arena

Following the conclusion of Uruguay Round and Doha Round, trade liberalization has become an irreversible trend throughout the world. The major economic powers initiate international trade standards and establish a new order for international trade in their ways. The new standards and order obstruct the developing nations' economic development and distort the trade liberalization. WTO former Secretary- General Moore stated in an article publicized in 1999, "In fact, the wealthy nations impose more tariffs on the poor nations than they impose tariffs on each other." Moore's remarks reflect the unfair and unethical international economic order, indicating the developed nations develop their economies by sacrificing the developing nations in the name of free trade.

As to the international cooperation on environment protection, both factors influence differently. Most environment policies and measures related to international trade were enacted and promoted by the development nations. The policies and measures were designed to internalize the environment costs through systems or motivations in order to eliminate the different levels of environment cost internalization through the unified standards and thereby ensure environment protection and fair trade. Apparently, the policies and measures implemented by the developed nations serve as an environment barrier.

Faced with the imbalanced relationship between trade and environment, the developing nations have to take a defensive stance in the international arena. For example, WTO concentrated on the issues related to the bundled solutions for trade and environment only. WTO Trade and Environment Committee" discussed the relationship between trade measures and multilateral trade system outlined in the Multilateral Environmental Agreements (MEAs) as well as the product-related Process or Production Methods (PPM) and environment logos. The relationship between MEAs and WTO and the relationship between nondiscriminatory environmental standards were discussed, but the issued faced by the developing nations, such as market access, control measures for domestic prohibited goods, and technical transfer, were ignored.

Opinions divided over trade and environment issues

The developed nations perceive trade liberalization and environment issues differently from the developing nations. Their disagreement is irreconcilable.

The developed nations believe:

(1) Trade restrictions are most powerful means to solve environment issues

All nations have the right to use either tariff or non-tariff to control or prohibit the import/export of pollutant products. All control measures have to meet WTO requirements regarding nondiscrimination, open market, fairness, and transparency. The developed nations maintain a higher environment standard than the developing nations and argue that the higher environment standard has decreased their competitive edge. But, the developed nations are unwilling to lower their environment standard same as the developing nations' standard. For example, United States strives to achieve the desirable health, safety, and environment goals, even if its standard is higher than the international standard, in order to promote the environment protection awareness and protect its domestic industries. Therefore, the developed nations urge WTO to allow its member nations adopting countervailing-measures against dumping if different nations impose different taxes on the same product or if exporting nations imposes fewer taxes. Secondly, if a nation imposes fewer taxes, other nations are likely to lower their environment standards to the standard adopted by that nation. In other words, the "race to the bottom" triggers the developed nations to lower their environment standards. Therefore, international organizations had better allow their member nations to impose anti-subsidy taxes as the countervailing-measure against dumping.

(2) Environment protection is a top priority for international trade

Pollutions are threatening human beings' existence and development. In consideration of sustainable development, pollution has to be minimized, environment-hostile products have to be prohibited, environment-friendly products have to be encouraged, eco-markets have to be expanded, cost internalization and adaptability has to be stressed throughout the trade liberalization process.

(3) Unification of international environment standards

Environment standard is one of the most controversial issues between the North and South. The developed nations believe that a unified and appropriate environment standard has to be adopted and attached to WTO multilateral trade system regardless of whatever economic development status. In addition, the developed nations disagree to the environment subsidy granted by government to enterprises.

The developing nations believe:

(1) Economic development and elimination of poverty are the top challenges faced by the developing nations. It is, therefore, difficult for the developing nations to formulate their policy priorities in the same manner as the developed nations do.

(2) The tariffand non-tariff trade barriers adopted by the developed nations in relation to environment protection are known as green barriers, influencing the developing nations' export tremendously. B The developed nations resort to trade sanctions all the time and thus cause unfairness between the North and South. United States uses trade sanctions and barriers frequently. From the developing nations' standpoint, environmentalism is nothing but an excuse, protecting United States and Europe. Furthermore, some developing nations indicate that the developed nations are spending too much. The North keeps 80% of the world's wealth, consumes 80% of the world's resources, and produces 80% of the world's pollutions. They urge the aforesaid imbalance to be included into consideration for the bundled solutions between trade and environment.

(3) To protect their "sunset industries", the developed nations have initiated a number of environment protection technical standards and ecological logo system, protecting their trade discreetly. These standards and logos were initiated in accordance with the developed nations' technical achievements. The developed nations force the financially stressed developing nations to accept their environment standards. As a result, the developing nations' production costs increase while their export's competitive edge decreases. The developing nations really have to implement special clauses for their benefits.

(4) Most enterprises of the developing nations are short of financial capability and are therefore unable to bear the environment cleanup costs. Their governments should subsidize the enterprises and products to a certain extent.

(5) The developed nations must not resort to a double-standard, implementing non-tariff barriers to ban the developing nations' products on one hand and encouraging their enterprises to ship the contaminative production facilities to the developing nations on the other hand.


Based on the 'bundled solutions' view of trade and environment proposed by Hansen (1999), game theory analysis methods were applied to examine the possibility of including environment issues in trade negotiations. According to the research results, once trade and environment liberalization are combined in the negotiation, the international community will combine trade issues and environment issues in the decision-making process. The approach is highly efficient and serves the developed nations' interest. The developing nations worry about trade protection and cannot but join the game. They are afraid if the rules 'turn into' a system in the near future. Therefore, how to help the developing nations accept and join the game remains the focus of debate. As to trade liberalization, the developing nations are worrying less than before. As for the relationship between economic development and environment protection, the developing nations stick to their own criteria and have different priorities from developed nations. It is important to note that the 'biased' distribution of benefits between the North and South disturbs the balance between trade and environment policy.



1. Antweiler, W., Copeland, B.R. and Taylor, M.S. (2001). Is the Free Trade Good for the Environment?, American Economic Review.P.21-30.

2. Anderson, K. (1992). Effect on the Environment and Welfare of Liberalization World Trade : the Case of Coal and Food, The Greening of World Trade Issue. Ann Arbor: University of Michigan Press.P.151-159.

3. Baumol, W.J. (1989). The Theory of Environmental Economics, Cambridge University Press. P. 87-92.

4. Bhagwati, J. (1993). The Case for Free Trade, Scientific American.P.23-31.

5. Birdsall, N. and Wheeler, D. (1992). Trade Policy and Industrial Pollution in Latin America : Where are the Pollution Havens?, International Trade and the Environmental, Washington, DC : World Bank.P.187-193.

6. Barrett, S. (2003). Environment and Statecraft. Oxford University Press.P.21-25.

7. Beghin, J. and Potier, M. (1997). Effect of Trade Liberalization on the Environment in the Manufacturing Sector, World Economy.P.112-117.

8. Baumöl, W and Gates, W. (1989). The Theory of Environmental Policy, Cambridge, Massachusetts : Cambridge University Press.P.63-71.

9. Barrett (1994). Strategic Environmental Policy and international Trade. Journal of Public Economics, 54, P.325-338.

10. Dean, J. (1992). Testing the Impact of Trade Liberalization on the Environment: Theory and Evidence. Mimeo, 1997, International Trade and the Environment, Washington, DC : World Bank.P.142-148.

11 . Dua, A. and Esty, D. C. (1997). Sustaining the asia Pacific Miracle. Washington, DC: Institute for International Economics. P. 66-72.

12. Ekins, P., Folke, C. and Costanza, R. (1994). Trade, Environment and Development: the Issue of Perspective, Ecological Economics.P.85-91.

13. Ederington, J. and Minier, J. (2003). Is Environmental Policy A Secondary Trade Barrier? An Empirical Analysis, Canadian Journal ofEconomics.P.32-36.

14. Eliste, P. and Fredriksson, PG. (1998). Does Open Trade Result in A Race to the Bottom? Cross-Country Evidence. Mimer, Washington, DC : World Bank.P.1-11.

15. Grossman,G.M. and Krueger, A.B. (1995). Economic Growth and the Environment, Quarterly Journal of Economics, P.33-42.

16. Hansen, M.W. (1999). Gross border Environmental Management in Transnational Corporations. Copehagen Business School, working paper.P.112-118.

17. Kathuria, V. (2007). Informal Regulation of Pollution in a Developing Country: Evidence from India, Ecological Economics, 63. 403-417.

18. Lucas, R.E.B., Hettige, H. and Wheeler, D. (1992). Economic Development, Environmental Regulation and International Migration and International Migration of Toxic Industrial Pollution: 1960-1988. International Trade and the Environment, Washington, DC : World Bank.P.193-201.

19. Lee, J.R. (1996). Basic Attributes of Trade and Environment : What do the Numbers Tell Us ? Ecological Economics. P. 87-92.

20. Lopez, R. (1997). Environmental Externalities in Traditional Agriculture and the Impact of Trade Liberalization : the Case of Ghana, Journal of Development Economics, 17-39.

21. Levinson, A. and M.S. Taylor (2008). Unmasking the Pollution Haven Effect. International Economic Review, 49(1), 223-254.

22. Magee, S. and Ford, WF. (1972). Environmental Pollution, the Terms of Trade, and the Balance of Payments. Kyklos.P.21-29.

23. Markusen, E. and Morey, N., and Olewiler (1995). Competition in Regional Environmental Policies when Plant Location are Endogenous, Journal of Public Economics.P.51-58.

24. Merrified, J. (1989). The Impact of Selected Abatement Strategies on Transnational Pollution, Terms of Trade, and Factor Rewards : A General Equilibrium Approach, Journal of Environmental Economics and Management.?. 16-23.

25. Pearson, C. (1987). Multinational Corporations, Environment, and the Third World, Journal of Environmental Economics and Management.P.87-91.

[Author Affiliation]

Chung-Ming Lin

Chienkuo Technology University, Taiwan

Chen-Kuo Lee

Lin Tung University, Taiwan

[Author Affiliation]

Contact email address:

Author Advanced search


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.