Industrial Pollution Abatement: The Impact on Balance of Trade

Abstract

This chapter uses an ex-post partial-equilibrium framework to measure the impact of marginal changes in industrial pollution abatement costs on the U.S. balance of trade in general, and balance of trade with Canada in particular. The impacts are found to be negative for most industries, growing with trade volume, and small relative to domestic consumption. In addition, some evidence is found that pollution control programs have changed the U.S. comparative advantage such that more high-abatement-cost goods are imported and more low-abatement-cost goods are exported. © Canadian Economics Association

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