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The Environmental Bias of Trade Policy*
Open accessAbstract
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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“It is also worth noting that existing trade policies, although not directly related to climate, affect global emissions: in most countries, import tariff and non-tariff barriers are substantially lower for dirty than for clean industries, which results in an implicit global subsidy to carbon emissions in internationally traded goods 17 .”
From Potential impacts and challenges of border carbon adjustments (2022) · cites this paper as [17]
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Metadata
- 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
- 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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