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Why are Firms that Export Cleaner? International Trade, Abatement and Environmental Emissions

Author

Listed:
  • Toshihiro Okubo

    (Faculty of Economics, Keio University)

  • Rikard Forslid

    (Department of Economics, Stockholm University)

  • Karen Helene Ulltveit-Moe

    (Department of Economics , University of Oslo)

Abstract
This paper proposes a detailed mechanism for why exporting rms may have a lower emission intensity when emissions are subject to an environmental tax. This mechanism of our model is supported by Swedish rm-level data. Our mechanism runs through rms' endogenous investments in abatement. Firms' abatement investments depend on their production volumes, since a larger scale allows them to spread the xed costs of abatement investment across more units. Production volumes increase in rm productivity and, as a consequence, rms' emission intensity is negatively related to rm productivity. Exporting also leads to higher production volumes and thereby to a lower emission intensity. Thus, trade has an eect on emissions independently of rm productivity. Trade therefore leads to higher but cleaner production. The overall eect of trade on emissions is neutral in our model. Trade liberalization does not aect aggregate emissions in our benchmark case of symmetric countries.

Suggested Citation

  • Toshihiro Okubo & Rikard Forslid & Karen Helene Ulltveit-Moe, 2018. "Why are Firms that Export Cleaner? International Trade, Abatement and Environmental Emissions," Keio-IES Discussion Paper Series 2018-013, Institute for Economics Studies, Keio University.
  • Handle: RePEc:keo:dpaper:2018-013
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    File URL: https://ies.keio.ac.jp/upload/pdf/en/DP2018-013.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm heterogeneity; emissions; international trade; abatement cost;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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