Nancy H. Chau, Charles H. Dyson School of Applied Economics and Management, Cornell University, Ithaca, NY 14853 (hyc3@cornell.edu). Rolf Färe, Department of Economics, Oregon State University, Corvallis, OR 97331 (Rolf.Fare@orst.edu). Shawna Grosskopf, Department of Economics, Oregon State University, Corvallis, OR 97331 (Shawna.Grosskopf@orst.edu).
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Trade Restrictiveness and Pollution
Article first published online: 21 JAN 2013
DOI: 10.1111/jpet.12008
© 2013 Wiley Periodicals, Inc.
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How to Cite
CHAU, N. H., FÄRE, R. and GROSSKOPF, S. (2013), Trade Restrictiveness and Pollution. Journal of Public Economic Theory, 15: 25–52. doi: 10.1111/jpet.12008
We are grateful to an associate editor of this journal and a referee for insightful suggestions and comments. The usual disclaimer applies.
Publication History
- Issue published online: 21 JAN 2013
- Article first published online: 21 JAN 2013
- Received September 3, 2009; Accepted April 17, 2011.
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Abstract
This paper proposes a trade restrictiveness indicator that explicitly incorporates environmental externalities. The index employs directional distance functions and uses indicators (i.e., differences rather than ratios) modified to account for and evaluate efficiency changes in the face of simultaneous and multidimensional trade and environmental policy reforms. The index is made up of two components, one for production and one for consumption. Our overall trade restrictiveness indicator is accordingly the difference of the two. The properties of the indicator are developed and discussed together with its estimation.