We employ a common agency model to study the in‡uence of green and producer lobbies on
the determination of trade and environmental policies. We focus on two large countries that
are linked by trade ‡ows and transboundary pollution. We show that the nature of the
relationship between the lobbies and the relative e¢ciency of unilateral and cooperative
policy outcomes depend crucially whether governments use one or both policy instruments,
whether they act in a unilateral or cooperative manner, and the size of the ‘emission
leakages’ and the associated transboundary spillovers.
KEYWORDS: Transboundary Pollution, International Trade, Interest Groups.
JEL Classi…cation: D72, F13, Q20, Q28.
Address for correspondence:
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University of Warwick
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