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Three essays on international trade, political economy and environmental policy

by Yu, Zhihao

Abstract (Summary)
This dissertation contains Aee papers that contribute to the t heory of international trade, political econow and trade and environmental protection. The first paper develops a mode1 to examine the costs and benefits of trade in differentiated products. It Focuses on how relative ability in exporting variety between two countries determines economic welfare in both countries. The results shed light on the question of why export-promotion programs in many countries aim not only to help their e'osting e-xporting Erms export more' but also to help dornestic firms become new exporting firms or enter new foreign markets. The paper also discusses the possibility of over-provision of export variety and raises some questions regarding the benefits of trade in differentiated products. The second paper siiggests some colierent explanations for tariff reductions and substi- tution of non-tariff barriers for tari& taking into account both organized specid interests and unorganized consumer interests. It focuses on how the presence of informed consumers affects the political equilibrium choice of trade policy - both the Ievel of protection and the policy instrument. The paper identifies three effects that interact with each other as an incumbent government substitutes a YTB for a tariff and finds, among other things, that an increase in foreign cornpetition will not cause the government to substitute NTBs For tariffs but a rise in the government's valuation of political contributions might. The third paper shows that small or financially constrained environmentalist groups can compete indirectly through changing public preferences over environmental quality, though they ~nay be in a weak position relative to polluting industries in the direct com- petition for political influence. It is also shown, however: that in a small open economy where the output price is exogenously determined, the value of domestic persuasion falls and government environmental policies will be determined by direct political competition. Moreover, direct cornpetition for political influence in the open economy becomes more intense because positions of different groups on environmental policy becorne more estreme. The analysis also shows that moving to free trade would increase a country's environmental protection as long as the median voter were not very 'green'.
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Source Type:Master's Thesis

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Date of Publication:01/01/1999

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