| Abstract | With the growth of the world economy, the environment problem has been being paid more and more attention. The developing countries make remarkable achievements in the progress of industrialization; however also face the great environment problems. In the framework of the Harris-Todaro model, we introduce a production-production externality and assume that the activity in the urban sector negatively affects (pollutes) the rural sector. We see how the improvement of the abatement of pollution technology and tariff affect the environment, unemployment as well as social welfare with general equilibrium analysis. Two cases of the short run, where capital is sector specific, and the long run, where capital is mobile between sectors, are considered. We find that in the short run the effect of improvement of the abatement of pollution technology is positive, whereas it is paradoxically negative in the long run; the effect of tariff is negative in the short run, however, it is positive in the long run. |