ABSTRACT
The international dimension of environmental policy arises from the fact that pollutants generated as an inevitable byproduct of production in any country can cross national borders, carried by physical media like w ater or air. As a result, it is the total amount of accumulated pollutants that affects a country and not just the country’s own emissions. These international
environm ental problem s vary in nature from truly global problems, such as depletion of the ozone layer or global warming associated with the greenhouse effect, to more localized problems, such as pollution of the M editerranean or the acid rain problem in Europe. In practice, attem pts to form a policy capable of dealing with international problems have focused on international agreem ents (e.g. the Helsinki Protocol or the M ontreal Protocol). In the recent literature on environmental economics, the focus has been on the em ergence of international cooperation and underlying incentives (C arraro and Siniscalco, 1992). International cooperation among countries is necessary in the case of global pollution, since outcomes related to laissez-faire equilibria are inefficient, because each country chooses its pollution behavior ignoring the cost imposed on other countries as a result of its behavior.1
