The Competitiveness Impacts of Climate Change Mitigation Policies

Joseph Aldy and William Pizer

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: The pollution haven hypothesis suggests that unilateral domestic emission mitigation policies could cause adverse "competitiveness" impacts on domestic manufacturers as they lose market share to foreign competitors and relocate production activity--and emissions--to unregulated economies. We construct a precise definition of competitiveness impacts appropriate for climate change regulation that can be estimated exclusively with domestic production and net import data. We use this definition and a 20+ year panel of 400+ U.S. manufacturing industries to estimate the effects of energy prices, which is in turn used to simulate the impacts of carbon pricing policy. We find that a U.S.-only $15 per ton CO2 price will cause competitiveness effects on the order of a 1.0 to 1.3 percent decline in production among the most energy-intensive manufacturing industries. This amounts to roughly one-third of the total impact of a carbon pricing policy on these firms' economic output.

JEL-codes: F18 Q52 Q54 (search for similar items in EconPapers)
Date: 2011-12
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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https://research.hks.harvard.edu/publications/work ... ?PubId=8115&type=WPN

Related works:
Journal Article: The Competitiveness Impacts of Climate Change Mitigation Policies (2015)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2015)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2014)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2011)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp11-047

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