A Study On The Interactions Between Environment And Trade Based On Two-comparative-advantage Model

Contemporarily, environment problems are getting worse, it's necessary to conduct still further research on this issue, of which, the interaction between environment and trade is an important aspect. There are many researches on the interaction between environment and trade, mainly in two aspects, how would trade affect environment quality and how would environment policies affect trade. Those researches have not got a consistent conclusion and they cannot put the two aspects together. So their methods and conclusions have limitation and apply in just a few situations.In this dissertation, I developed the concept of carbon emission comparative advantage referring to the comparative advantage theory. Then I build a Two-Comparative-Advantage model with the two kind of comparative advantage. This model contains two countries, producers of the two countries and two products. The producers choose trade division basing on comparative advantage to maximize their profit and governments adjust trade with policies basing on carbon emission comparative advantage for the purpose of minimize total carbon emission. The model put the two processes together and studied how they affect each other and the final result of trade, based on which, the study on the interaction between environment and trade is carried out. Then I analyzed the effect of different policies by studying their influence on the model.The result shows that how environment and trade affect each other depends on the consistency of carbon emission comparative advantage and comparative advantage of the two countries in bilateral trade. When the two kind of comparative are consistent in two countries, bilateral trade can reduce the total carbon emission of the two countries and thus improve the environment quality. Vice versa, bilateral trade would increase total carbon emission of the two countries and deteriorate the environment. On the basis of cooperation, governments can make policies together to reduce the bad influence caused by trade. Environment policies and trade policies can both be effective in some degree. But compare to each other, environment policies have a better performance.