Environmental Policy and Firm Selection in the Open Economy

Hartmut Egger (), Udo Kreickemeier and Philipp Richter ()

Journal of the Association of Environmental and Resource Economists, 2021, vol. 8, issue 4, 655 - 690

Abstract: In this paper, we analyze the effects of a unilateral change in an emissions tax in a model of international trade with heterogeneous firms. We find a positive effect of tighter environmental policy on average productivity in the reforming country through reallocation of labor toward exporting firms. Domestic aggregate emissions fall, due to both a scale and a technique effect, but we show that the reduction in emissions following the tax increase is smaller than in autarky. Moreover, general equilibrium effects through changes in the foreign wage rate lead to a reduction in foreign emissions and, hence, to negative emissions leakage. In case of transboundary pollution this exerts in turn a positive feedback effect on the domestic environment.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://dx.doi.org/10.1086/713040 (application/pdf)
http://dx.doi.org/10.1086/713040 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: Environmental Policy and Firm Selection in the Open Economy (2019)
Working Paper: Environmental Policy and Firm Selection in the Open Economy (2019)
Working Paper: Environmental policy and firm selection in the open economy (2019)
Working Paper: Environmental policy and firm selection in the open economy (2019)
Working Paper: Environmental policy and firm selection in the open economy (2019)
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:ucp:jaerec:doi:10.1086/713040

Access Statistics for this article

More articles in Journal of the Association of Environmental and Resource Economists from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().