The Carbon Cost of Competitive Pressure

Vesa Pursiainen, Hanwen Sun and Yue Xiang
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Vesa Pursiainen: University of St. Gallen; Swiss Finance Institute
Hanwen Sun: University of Bath, School of Management
Yue Xiang: Durham University

No 25-16, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Higher exposure to competition – measured by product fluidity – is associated with higher carbon emission intensity. This result is robust to using instrumental variables to obtain exogenous variation in fluidity. The positive relationship between competition and carbon emissions is stronger for firms in areas less concerned about climate change. It is also stronger in areas with weaker social norms. Our results suggest that shorttermism is not the primary driver, as the emissions-competition link is at least as strong for firms with longer-term-oriented shareholders. Our findings suggest that policies promoting competition may be at odds with climate change abatement.

Keywords: carbon emissions; carbon intensity; competition (search for similar items in EconPapers)
JEL-codes: D40 G30 M14 Q50 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2025-02
New Economics Papers: this item is included in nep-com, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2516

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