Title: A Cournot competition model with the uniform pollution tariff: an application to NAFTA

Authors: Jian-F. Li, Dwight B. Means Jr., Leonard S. Chen, Hsiao P. Peng

Addresses: National Chung Cheng University, Chia-Yi, Taiwan. ' University of Memphis, Memphis, TN 38152, USA. ' National Sun Yat-Sen University, Kaoshiung, Taiwan. ' The Union Bank of Taiwan and National Chung Cheng University, Tao Yuen, Taiwan

Abstract: This paper investigates the impact of a uniform pollution tariff on production, consumption and consumer welfare in the framework of the Cournot competition. It suggests that the uniform pollution tariff would raise the welfare of US consumers. However, it would penalise the higher-cost producer in the country where environmental regulations are more stringent. The policy implication is that economic integration, such as NAFTA, should take discriminatory pollution tariffs into consideration.

Keywords: Cournot competition; NAFTA; pollution tariffs; uniform pollution tariff; North American Free Trade Agreement; environmental pollution; consumer welfare; economic integration.

DOI: 10.1504/IJEP.1996.028266

International Journal of Environment and Pollution, 1996 Vol.6 No.1, pp.50 - 56

Published online: 16 Sep 2009 *

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