American Economic Review Vol. 91 No. 4 2001

Is Free Trade Good for the Environment?

Werner Antweiler¹; Brian R. Copeland²; M. Scott Taylor³

¹ Faculty of Commerce, University of British Columbia, 2053 Main Mall, Vancouver, BC, V6T 1Z2, Canada. · ² Department of Economics, University of British Columbia, 997-1873 East Mall, Vancouver, BC V6T 1Z1, Canada. · ³ Department of Economics, Social Science Building 6448, University of Wisconsin, 1180 Observatory Drive, Madison, WI 53706.

Abstract

This paper investigates how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade's impact on pollution into scale, technique, and composition effects and then examine this theory using data on sulfur dioxide concentrations. We find international trade creates relatively small changes in pollution concentrations when it alters the composition of national output. Estimates of the trade-induced technique and scale effects imply a net reduction in pollution from these sources. Combining our estimates of all three effects yields a somewhat surprising conclusion: freer trade appears to be good for the environment.

DOI

10.1257/aer.91.4.877

Volume

91

Issue

4

Pages

877-908

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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