Research into the effects of trade liberalisation on pollution by Associate Prof. Skerdilajda Zanaj will be published in a forthcoming issue of Ecological Economics.
Associate Prof. Zanaj and her co-authors – Giulia Ceccatoni and Ornella Tarola (both University of Rome) – in their paper establish that environmentally-friendly goods are often perceived as status goods by buyers. Consumers therefore express a certain preference for these goods compared to “brown goods”. However, these preferences may not be shared equally by consumers in developed and emerging countries.
By developing a model, the researchers found that trade liberalisation can favour brown goods production, and therefore be more detrimental to the environment, when developed and emerging countries do not share a preference for green goods. At the same time, global emissions could be decreased by both developed and emerging countries sharing the same preference for green goods.
In being able to empirically test these assumptions, the model developed by the team may be used to assess to what extent consumer preferences are present in the developed and developing country in question. By extension, it can also be used to determine the value of environmental preference intensity that would result in international trade relations becoming detrimental for the environment.
With international trade relations playing a key role in globalised economies the research helps shed light on how to limit the environmental footprint of international trade.
The paper “Green consumption and relative preferences in a vertically differentiated international oligopoly” has been accepted for publication by Ecological Economics, an international journal ranked top field category 1 by the National Centre for Scientific Research (CNRS).