The effect of foreign carbon prices on German outward FDI

Jonas Böschemeier and Axel Jochem

Economics Letters, 2024, vol. 234, issue C

Abstract: Carbon prices are an integral tool to tackle climate change, yet they could lead to competitive disadvantages for firms that have to pay them. This paper finds that German foreign direct investment decreases in response to higher carbon prices in the destination country, particularly in industries that are both emission-intensive and exposed to international trade.

Keywords: FDI; Carbon prices; Competitiveness; Carbon leakage (search for similar items in EconPapers)
JEL-codes: F21 F64 Q50 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:234:y:2024:i:c:s0165176523005256

DOI: 10.1016/j.econlet.2023.111499

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