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The impact of the European Union Emission Trading Scheme on Multiple Measures of Economic Performance

Giovanni Marin (), Marianna Marino and Claudia Pellegrin
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Marianna Marino: ICN Business School, BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique
Claudia Pellegrin: EPFL - Ecole Polytechnique Fédérale de Lausanne

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Abstract: The European Emission Trading Scheme (EU ETS) has introduced a price for carbon, thus generating an additional cost for companies that are regulated by the scheme. The objective of this paper is to provide empirical evidence on the effect of the EU ETS on firm-level economic performance. There is a growing body of empirical literature that investigates the effects of the EU ETS on firm economic performance, with mixed results. Differently from the previous literature, we test the effect of the EU ETS on a larger set of indicators of economic performance: employment, average wages, turnover, value added, markup, investment, labour productivity, total factor productivity and ROI. Our results, based on a large panel of European firms, provide a broad picture of the economic impact of the EU ETS in its first and second phases of implementation. Contrarily to the expectations, the EU ETS did not affect economic performance negatively. Results suggest that firms have reacted to the EU ETS by passing-through costs to their customers on the one hand and improving labour productivity on the other hand.

Keywords: European Emission Trading Scheme; economic performance (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env and nep-reg
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Published in Environmental and Resource Economics, Springer, 2018, pp.551-582. ⟨10.1007/s10640-017-0173-0⟩

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DOI: 10.1007/s10640-017-0173-0

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