Cleaner Firms or Cleaner Products? How Product Mix Shapes Emission Intensity from Manufacturing

Geoffrey Barrows () and Hélène Ollivier
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Geoffrey Barrows: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: We explore the contribution of product mix in determining firm and aggregate emission intensity. First, using detailed firm-product emission intensity data from India, we find that more efficient firms are less emission intensive, and that products with the largest sales tend to be cleaner than other products within the firm. We also find that emission intensity in India dropped significantly between 1990-2010 through reallocations across firms, while product mix played a counteracting role in increasing firm emission intensity. Next, we develop a multi-product multi-factor model with heterogeneous firms, variable markups, and monopolistic competition in which each product has a specific emission intensity. We find that pro-competitive market developments lead to an improvement in the aggregate emission intensity – through reallocations across firms – even though firms can become dirtier or cleaner through product mix. This theoretical result fits particularly well the empirical facts.

Date: 2018-03
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Citations: View citations in EconPapers (63)

Published in Journal of Environmental Economics and Management, 2018, 88, pp.134-158. ⟨10.1016/j.jeem.2017.10.008⟩

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Journal Article: Cleaner firms or cleaner products? How product mix shapes emission intensity from manufacturing (2018)
Working Paper: Cleaner Firms or Cleaner Products? How Product Mix Shapes Emission Intensity from Manufacturing (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-01630318

DOI: 10.1016/j.jeem.2017.10.008

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