Multiple Policy Goals in a Trade Model with Explicit Factor Markets

As trade protectionism has been reduced through multilateral agreements, concerns have been raised about competitiveness effects of cross‐country differences in environmental and labor standards. Costs associated with decreased competitiveness are distributed across consumers and the various providers of inputs used in the production of affected commodities. In this paper we present a trade model which can be used to help quantify the magnitude and distribution of costs associated with changes in input regulations. The model can also be used to identify levels of policies required to offset or redistribute costs associated with regulations which reduce international competitiveness.