A new GLO Discussion Paper finds that “green” subsidies can lead to a win-win situation for export countries.

GLO Discussion Paper No. 1240, 2023

Green subsidies as strategic trade policy tools – Download PDF
by Buccella, Domenico & Fanti, Luciano & Gori, Luca

GLO Fellow Luca Gori

Author Abstract: In a three-country model in which export countries adopt environmental policies, this note analyses how abatement (“green”) subsidy can become a potential strategic trade policy tool. When governments set the optimal policy tool considering their local environmental damages, a rich set of equilibria arise. In contrast to the standard result, it is shown that subsidising pollution abatement can 1) emerge as a Pareto-efficient equilibrium of the game; and 2) be the only feasible environmental policy when environmental awareness is low, irrespective of the technological efficiency. Therefore, “green” subsidies can lead to a win-win situation.

JUST PUBLISHED

Vol. 36, Issue 2, April 2023: Journal of Population Economics (JOPE) 16 articles.
https://link.springer.com/journal/148/volumes-and-issues/36-2

Vol. 36, Issue 1, January 2023: Journal of Population Economics (JOPE) 16 articles. https://link.springer.com/journal/148/volumes-and-issues/36-1
Watch the videos of article presentations on December 1, 2022 during the GLO Global Conference 2022.

JOPE has CiteScore 6.5 (2021, LINK) & Impact Factor 4.7 (2021, LINK)

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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