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Greenhouse-Gas Emission Controls and Firm Locations in North–South Trade

Jota Ishikawa and Toshihiro Okubo ()

Environmental & Resource Economics, 2017, vol. 67, issue 4, No 1, 637-660

Abstract: Abstract This paper studies greenhouse-gas emission (GHG) controls in the presence of international carbon leakage through international firm relocation. In a new economic geography model with two countries (‘North’ and ‘South’), only North sets a target for GHG emissions. We compare the consequences of emission quotas and emission taxes under trade liberalization on location of two manufacturing sectors with different emission intensities and degrees of carbon leakage. With low trade costs, further trade liberalization increases global emissions by facilitating carbon leakage. Regulation by quotas leads to spatial sorting, resulting in less carbon leakage and less global emissions than regulation by taxes.

Keywords: Global warming; Emission tax; Emission quota; Carbon leakage; Firm relocation; Trade liberalization (search for similar items in EconPapers)
JEL-codes: F18 Q54 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Greenhouse Gas Emission Controls and Firm Locations in North-South Trade (2013) Downloads
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DOI: 10.1007/s10640-015-9991-0

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