Safe Minimum Standards (SMSs) has been advocated as a policy rule for certain environmental problems where uncertainty about risks and consequences are thought to be profound. The present paper explores the rationale for such a policies and derives conditions for when a SMS can be summarily dismissed as a policy choice and for when SMS can be defended as an optimal policy based on standard economic criteria. It turns out that these conditions can be checked with quite limited information about damages and risks.

Current international law strongly favors policies designed to make imports safer (e.g., in terms of invasive species) over policies explicitly designed to discourage imports. We show that this preference may be counterproductive. A externality in trade is incorporated into a political-economy model of policy formation. Nations can address the externality by inspecting cargo and imposing a fine on contaminated imports. We compare the equilibrium when inspection is the only policy option relative to the equilibrium that emerging when nations may also manipulate the tariff. Ruling out the tariff causes socially excessive stringency in general, social welfare losses if domestic supply is highly inelastic, and in some circumstances an increase in the real tariff, measured as the difference between world and domestic prices.

P>We show that the second-best case against the optimality of free trade remains valid in the face of a well-targeted, but costly, policy response. Trade between a North, where property rights can be enforced at relatively low cost, and an otherwise identical South, yields trade patterns and welfare results nearly identical to those previously shown to arise if North and South differ exogenously in the extent of control over resources. Both nations respond optimally to world prices, and the opening of trade leads to the development of property rights in the South. Nonetheless, for a set of world prices bounded by the South's autarky price, the South is better off under autarky and is made worse off by each increase in its export price.

This paper develops a generalization of Chichilnisky's [Chichilnisky, G., 1994. North–South Trade and the global environment. American Economic Review 84 (4), 851–874.] model of North–South Trade, making use of the dual theory of international trade. The central purpose is to provide rigorous proof of the previously unproven assertion that the South can lose from trade and from price changes that normally constitute terms-of-trade improvements.

Trade has become the main mode of transport for many invasive species, including diseases and agricultural pests. Most species are brought to their new homes unintentionally, which constitutes a market failure rooted in international trade. Unless it is practical to drive invasion risk to zero, the external costs may justify a tariff. In this paper, we analyze the political process likely to govern the formation of tariffs so justified using a straightforward incorporation of an invasive species externality into Grossman and Helpman's (GH) well-known political economy model. We show that our measure of disguised protectionism—the gap between the optimal tariff and that set in the equilibrium of the political economy game—is equal to the tariff that would be set if there were no invasive species and no international disciplines on trade policy. The informational needs required to distinguish disguised protectionism from legitimate public-goods protection are formidable.

The efficient auction is designed to induce truthful bidding for bidders with affiliated values. Herein we implement the auction in the lab, and observe inexperienced people can bid systematically in this more complex environment, albeit yielding a flatter bid function than the truthful one.

This paper tests if the endangered species protection process accelerates construction by developers seeking to avoid potential restrictions. The case of the pygmy owl outside of Tucson, Arizona is used as a natural experiment. It is found that the protection process has accelerated development.

It is found that nonconvexities do not reduce the overall efficiency of Coasean bargaining in the laboratory. Also, it is observed that most bargainers act in their own constrained self-interest when bargaining over an efficient corner solution relative to the standard baseline case.

Second-price auctions are designed to induce people to reveal their private preferences for a good. Laboratory evidence suggests that while these auctions do a reasonable job on aggregate, they fall short at the individual level, especially for bidders who are off-margin of the market-clearing price. Herein we introduce and explore whether a random nth-price auction can engage all bidders to bid sincerely. Our results first show that the random nth-price auction can induce sincere bidding in theory and practice. We then compare the random nth-price to the second-price auction. We find that the second-price auction works better on-margin, and the random nth-price auction works better off-margin.

Evidence suggests the calibration of hypothetical and actual behavior is good-specific. We examine whether clustering commodities into mutual categories can reduce the burden. While we reject a common calibration across sets of commodities, a sport-specific calibration function cannot be rejected.