Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Should We Tax Trade? A Pigouvian Perspective
Journal of Economic Perspectives
(pp. 101–22)
(Complimentary)
Abstract
We develop a simple and intuitive Pigouvian perspective on optimal trade policy. Our approach unifies a wide range of rationales for taxing trade, from the classical optimal tariff argument to contemporary debates about global carbon emissions and geopolitics. We also clarify when trade policy intervention is warranted and when alternative domestic instruments should be used instead.Citation
Costinot, Arnaud, and Iván Werning. 2026. "Should We Tax Trade? A Pigouvian Perspective." Journal of Economic Perspectives 40 (3): 101–22. DOI: 10.1257/jep.20251491Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- F11 Neoclassical Models of Trade
- F13 Trade Policy; International Trade Organizations
- F18 Trade and Environment
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies