Date of Graduation
1999
Document Type
Thesis
Abstract
In recent decades there has been a debate over the entwined issues of trade and the environment, and the 1990s witnessed a great rise in global environmental concerns. The purpose of the present study is to seek a cooperative solution to these concerns. Postwar environmental movement, interaction of trade and the environment, and the reconciliation issues are reviewed. Methodologies to studying these issues are categorized into (1) international trade approaches, and (2) environmental economics approaches. A political model-cost sharing game is then proposed. Specifically, environmental problems resulting from trade are treated as international public goods and the issue of optimal provision of public goods is analyzed in a game-theoretic framework. The economy consists of one public good, one private good, and a set of agents (sovereign countries or regions). Each agent's strategy is to decide the levels of his private consumption and resources devoted to public goods provision, given his budget constraint. It is shown that the cooperative game with a gamma-characteristic function has a unique equilibrium which is Pareto efficient. Further, a new solution concept—Gini Ratio Equilibrium (GRE)—is developed which combines the virtues of all three fundamental modes of cooperations, i.e., direct agreement, justice and decentralized behavior. Finally, a taxation model is adopted to implement the GRE model. Thus the cost share for each agent is determined by a single political parameter—the elasticity of the cost share, given the total cost of the public good and the distribution of the initial endowments. The model is applied to the global warming case by showing how to finance a forest preservation project. The assumed player set is 195 countries, the total GDP of each country is the endowment, and the project cost is {dollar}9.9 billion. Cost shares for each country (and hence per-capita share) are calculated under three different elasticities: −0.3, 0, and 0.3. The United States (per-capita GDP {dollar}25,514) incurs the biggest share, with per-capita cost shares of {dollar}7.63, {dollar}9.69, and {dollar}10.85, respectively, for the three elasticities; while SaoTome and Principe (per-capita GDP {dollar}120) incurs the smallest one, with per-capita shares of {dollar}0.01, {dollar}0.05, and {dollar}0.18, respectively.
Recommended Citation
Zhou, Qingshui, "Trade and the environment: A political model of international public goods problem." (1999). Graduate Theses, Dissertations, and Problem Reports. 10112.
https://researchrepository.wvu.edu/etd/10112