Perseverance of perverse subsidies and their impact on trade and environment

Theoretical and empirical aspects of policy failures due to subsidies are d iscussed in the context of international trade. A general classification of subsidies that cause environmental externalities is presented. The economi c and environmental impacts of producer subsidies on international trade ar e examined with partial equilibrium analysis. The magnitude and economic an d environmental relevance of subsidies in various sectors is assessed on th e basis of empirical indicators. Finally, suggestions are provided on how s ubsidy-related policy failures can be eliminated at national and internatio nal levels. (C) 2001 Elsevier Science B.V. All rights reserved.