Global Policy Spillovers: How Environmental Policies Propagate through Product Attributes

Koichiro Ito, James Sallee, Caleb Halvorson-Fried and Andrew Smith

No 35197, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: When firms design products for global markets, domestic policies can propagate internationally by inducing changes in product attributes. We call this phenomenon attribute propagation and develop a framework to assess its economic significance. Using difference-in-differences analysis and structural estimation, we find that a fuel-economy subsidy in Japan led to substantial improvements in fuel economy in the United States. The impact is first-order—most CO2 emissions reductions from the Japanese policy arise through its effects in the United States. Our findings suggest that conventional economic analysis may understate the global impacts of many economic policies.

JEL-codes: L0 Q4 Q5 R4 (search for similar items in EconPapers)
Date: 2026-05
New Economics Papers: this item is included in nep-bec, nep-com, nep-ene and nep-env
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