Global Firms and Emissions

Ohyun Kwon, Hao Zhao and Min Qiang Zhao
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Min Qiang Zhao: MOE Key Laboratory of Econometrics, Postal: The Wang Yanan Institute for Studies in Economics, Xiamen University
Authors registered in the RePEc Author Service: Min Qiang (Kent) Zhao

No 2020-13, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: This paper finds that both importing and exporting can effectively reduce firm-level emission intensities. In our theoretical contribution, we develop a model in which firms endogenously determine whether or not to import foreign intermediate inputs and the extent of investment in emissions abatement. The model shows that the complementarity between import and abatement decisions reduces firm-level emission intensities when firms import foreign intermediate inputs. In our empirical contribution, we estimate a theory-guided regression model using Chinese firm-level data on emissions and trade. Our IV regression results show that when a firm starts importing, its emission intensities drop by approximately 30% across the types of emissions that we study. The estimate of the export margin, despite being statistically significant in the OLS results, appears to be more sensitive to regression specification in the IV results and is lower in magnitude than that of the import margin

Keywords: International trade; Emissions; China (search for similar items in EconPapers)
JEL-codes: D22 F18 Q56 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2020-08-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:drxlwp:2020_013

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