Planning and Budgeting

The growth of economic activities may lead to increased emissions and detriment of the environment. Hence, pursuit of policies to moderate the environmental impact of economic activities has always been the main concern of policymakers and economic researchers. This study attempts to assess the policy that supports importing green products in order to reduce local pollution. In the model, a polluting firm and welfare maximizer social planer play a Stakelberg game. The results show that the government may use environmental policy as to import green products to reduce pollution and enhance the welfare. By implementing this policy, the domestic firm has an incentive to invest in clean technologies in order to reduce government motivation to green import.