Trade, Innovation, Environment

Abstract

This book covers some of the most relevant issues in the new environmental economics. Its main emphasis is on the international dimension of environmental phenomena, which implies the necessity of designing properly coordinated economic/environmental policies. The issue of policy coordination is analysed both in the case where environmental externalities arise because of cross-country and global pollution flows, and in the case where trade and competitiveness effects induced by environmental regulation affect countries' relative economic performance. The context in which these issues are analysed relies on recent developments of game theory, industrial economics, international trade where imperfect competition and governments' strategic interactions are accounted for. Recognizing that traditional environmental policy tools are not sufficient to regulate the present environment--economy interactions leads to appraise the effects of more sophisticated policy mixes. In particular, policies to stimulate technological innovation, to regulate industrial markets, to offset negative trade effects are examined. Attention is also devoted to the issue of economic growth. Under which conditions is endogenous growth consistent with environmental protection? Which policy mix can loosen the traditional tradeoff between environment and growth? These are two of the many critical questions which are addressed, and which find very interesting, albeit preliminary, answers.