Import competition and firm‐level CO2 emissions: Evidence from the German manufacturing industry

Jakob Lehr

Open Access Publications from Kiel Institute for the World Economy from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Using the German census of the manufacturing industry, I analyze the impact of import competition on carbon emissions per unit of deflated sales (emission intensity). I combine precise information on firm‐level CO emissions with sector‐level trade flows. Looking at the period 1995 until 2017, I focus on the impact of the rise of Eastern Europe and China while addressing the endogeneity of trade flows with an instrumental variable approach. The baseline results suggest that a 1 pp increase in the import penetration ratio caused a reduction of the average firm's emission intensity by approximately 0.3%. This result implies that the rise of the joint East between 1995 and 2017 kept the average firm's emission intensity 6% below the level it would have had in the absence of the East's rise. I do not find strong indication for reallocation of production towards more efficient firms. Finally, I supplement the analysis by examining the effect of export opportunities due to the East's rise. The results indicate that exporting to the East increased sales and emissions, with a small, if any, negative effect on emission intensities.

JEL-codes: D22 F18 L60 Q54 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-env and nep-iaf
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkie:323985

DOI: 10.1111/caje.70003

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