Induced clean technology adoption and international trade with heterogeneous firms

Jingbo Cui ()

The Journal of International Trade & Economic Development, 2017, vol. 26, issue 8, 924-954

Abstract: This paper introduces an environmental externality and factor-biased technology adoption into a trade model with heterogeneous firms. This study explores how firms’ decisions of technology adoption and of exports are affected by openness to trade and the stringency of environmental regulations. It shows that: (1) these decisions induced by tightened environmental policies depend upon whether the upgraded technology is labor-biased or emission-biased; (2) the environmental impact of trade cost reductions on the aggregate emissions and price of emissions permits varies with the factor-biased feature; and (3) regardless of the factor-biased feature, the trade cost reduction induces firms to export and to upgrade the factor-biased technology, while it forces the least productive firms to exit the market. Moreover, the model is further calibrated to simulate policy scenarios of bilateral and unilateral variations in trade variable costs and environmental policies. The bilateral reduction of emissions cap may contribute to welfare gains in both home and foreign countries. The unilateral action of tightening environmental policy in the home country may hurt the home country, but makes the foreign country better off.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://hdl.handle.net/10.1080/09638199.2017.1320579 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:26:y:2017:i:8:p:924-954

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJTE20

DOI: 10.1080/09638199.2017.1320579

Access Statistics for this article

The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk

More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().