Trade and the environment: The role of firm heterogeneity

Udo Kreickemeier and Philipp Richter ()

No 36, University of Tübingen Working Papers in Business and Economics from University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics

Abstract: This paper derives a new effect of trade liberalisation on the quality of the environment. We show that in the presence of heterogeneous firms the aggregate volume of emissions is influenced not only by the long-established scale effect, but also by a reallocation effect resulting from an increase in the relative size of more productive firms. We show how the relative importance of these effects, and hence the overall effect of trade liberalisation on the environment, is affected by the emission-intensity at the firm level: Aggregate emissions decrease when trade is liberalised if and only if firm-specific emission intensity decreases strongly with increasing firm productivity.

Keywords: Trade and Environment; Monopolistic Competition; Heterogeneous Firms; Environmental Effects (search for similar items in EconPapers)
JEL-codes: F12 F18 Q56 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-env and nep-int
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Citations: View citations in EconPapers (1)

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https://www.econstor.eu/bitstream/10419/59508/1/717788474.pdf (application/pdf)

Related works:
Journal Article: Trade and the Environment: The Role of Firm Heterogeneity (2014)
Working Paper: Trade and the Environment: The Role of Firm Heterogeneity (2012)
Working Paper: Trade and the Environment: The Role of Firm Heterogeneity (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuewef:36

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