Date of Award:

5-1985

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Economics and Finance

Department name when degree awarded

Economics

Committee Chair(s)

Terrence F. Glover

Committee

Terrence F. Glover

Committee

John Keith

Committee

W. Cris Lewis

Abstract

The major theoretical and practical economic issues on pollution have apparently been sorted out. However, the bulk of the literature in environmental economics shares a shortcoming: the disregard of the welfare implications and consequences of pollution control.

Traditionally, pollution is viewed as a joint product. In this study, the issue of trade and environmental regulations is cast as a problem of input regulation, and the subsequent welfare implications of input regulation are then derived. The purpose of the present research is to emphasize the welfare consequences of pollution control in the context of international or interregional trade. The Batra and Casas, Yohe, and McGuire models lay out the theory of the use of the environment in an open economy, deriving the effects of pollution on factor rewards. Using some generalizations of the models, the welfare impacts of changing regulations which govern the use of the environment are derived.

It is seen that for both a small and large country (region) with identical individuals, there is an optimal level of pollution. In the case where the economy is made up of two different groups of individuals, workers and capitalists (capital owners) in a small country (region), the workers lose while capitalists can either gain or lose. In the large country (region), it cannot be unambiguously determined whether workers and capitalists will be better or worse off than before the regulation changes.

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