1998 Fiscal Year Final Research Report Summary
Protection of Global Environment and Free Trade
| Project/Area Number |
08044040
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| Research Category |
Grant-in-Aid for international Scientific Research
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| Allocation Type | Single-year Grants |
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| Section | Joint Research |
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| Research Field |
経済政策(含経済事情)
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| Research Institution | Ritsumeikan University |
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Principal Investigator |
SHIBATA Hirofumi Ritsumeikan Univ., Collge of Policy Science, Professor, 政策科学部, 教授 (80112001)
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| Co-Investigator(Kenkyū-buntansha) |
ABE Kenzo Osaka University, Professor, 経済学部, 教授 (00175902)
IHORI Toshihiro University of Tokyo, Professor, 経済学部, 教授 (40145652)
HATTA Tatsuo University of Tokyo, Professor, 空間情報科学研究センター, 教授 (70008647)
PANAGARIYA Arvind University of Maryland, Professor, 経済学部, 教授
UETA Kazuhiro Kyoto University, Professor, 経済学部, 教授 (20144397)
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| Project Period (FY) |
1996 – 1998
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| Keywords | Free trade / Global Environment / Property Rights / Carbon Tax / Nash Equilibrium / Abatement Behavion / 外部性 / ロードプライシング |
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| Research Abstract |
This project investigated the relationships between protection of global environment and international free trade regime. Soon after the World War II, GATT was established to promote free trade and that spirit was re-established in the WTO in 1995. The idea was that uninhibited international flows of goods and services would promote production efficiency in each country participating in the free trade. However, a doubt was cast on this idea from the point of view of the global environmental protection. Much of exports from developing countries consist of natural raw material and raw material intensive products. Because raw materials are often under-priced or not priced at all in these countries due to the absence or imperfection of ownership rights, the raw materials and their derivatives are exported at the price below their social costs. Consequently, non-conservation of natural resources and degradation of the environment result. Restrictions aimed at discouraging exportation of the
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se items, it is argued, would facilitate protection of the natural resources and global environment.
This project examined theoretical soundness of these arguments and investigated alternative means of protecting the environment. Although complexity of the issues prevent us from reaching clear cut conclusions, it is found that the free trade itself is not at fault. The defects in the property right system and not sufficiently competitive domestic markets should be blamed. Nevertheless, if the defects in the right systems and imperfection of the market can not be remedied easily, restrictions on international trade might be justified as a second best solution.
Another aspect of environmental issues is the trans-nationalness of the environmental pollution such as acid rain and global warming. These global phenomena produce differentiated effects on trading countries' comparative advantages and distort locations of efficient production. Internationally concerted corrective actions are required. From this point of view, a uniform rate Ionian taxes and tradable pollution permits are often recommended for prevention of regional or global pollution. But our investigation produced a conclusion that casts a doubt on the theoretical soundness of these proposals. Because the polluters are often victims by themselves they adjust their polluting activities. A solution, therefore, requires means that shifts the existing Nash equilibrium to a more Pareto Preferred Nash equilibrium. For this purpose a set of differentiated rates is required for the Pigovian tax approach. Less
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