NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is Free Trade Good for the Environment?

Werner Antweiler, Brian R. Copeland, M. Scott Taylor

NBER Working Paper No. 6707
Issued in August 1998
NBER Program(s):   ITI

This paper sets out a theory of how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade's impact on pollution into scale, technique, and composition effects and then examine this theory using data on sulfur dioxide concentrations when it alters the composition, and hence the pollution intensity, of national output. Our estimates of the associated technique and scale efforts created by trade imply a net reduction in pollution from these sources. Combining our estimates of scale, composition, and technique efforts yields a somewhat surprising conclusion: freer trade appears to be good for the environment.

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Document Object Identifier (DOI): 10.3386/w6707

Published: Antweiler, Werner, Brian R. Copeland and M. Scott Taylor. "Is Free Trade Good For The Environment?," American Economic Review, 2001, v91(4,Sep), 877-908.

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