Cited by 259Climate Change Policy and EconomicsGlobal trade and economicsEnergy, Environment, Economic Growth

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The Environmental Bias of Trade Policy*

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Shapiro, Joseph S·2021·The Quarterly Journal of Economics

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Abstract

This article describes a new fact, then analyzes its causes and consequences: in most countries, import tariffs and nontariff barriers are substantially lower on dirty than on clean industries, where an industry’s “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO2 emissions in internationally traded goods and contributes to climate change. This global implicit subsidy to CO2 emissions totals several hundred billion dollars annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this pattern. The downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods, global CO2 emissions would decrease and global real income would change little.

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Authors: Shapiro, J. S.
Affiliations: National Bureau of Economic Research (US)
Corresponding author: Shapiro, Joseph S
ORCID: Shapiro, Joseph S
Venue: The Quarterly Journal of Economics
Publisher: Oxford University Press (OUP)
Published: 2020-12-16
Volume: 136
Issue: 2
Pages: 831-886
ISSN: 0033-5533 (ISSN-L)
1531-4650
DOI: 10.1093/qje/qjaa042
OpenAlex: W3114459510
Cited by: 259
References: 74
Citations by year: 2026: 46 · 2025: 70 · 2024: 53 · 2023: 44 · 2022: 27 · 2021: 13 · 2020: 4
FWCI: 18.70
Type: journal article
Language: en
Open access: green
www.nber.org
Licence: academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model (vor)
Locations: The Quarterly Journal of Economics (publishedVersion)
RePEc: Research Papers in Economics (submittedVersion)
SSRN Electronic Journal (submittedVersion)
eScholarship (California Digital Library) (submittedVersion)
Funders: National Science Foundation (1850790)
U.S. Department of Agriculture
Alfred P. Sloan Foundation
National Institute of Food and Agriculture
Topics: Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
Keywords: trade policy, environmental bias, import tariffs, non-tariff barriers, CO2 emissions, heavily polluting industries, climate change, industry lobbying, general equilibrium model, international trade

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The Environmental Bias of Trade Policy*

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