Exporting Pollution: Where Do Multinational Firms Emit CO₂?

Itzhak Ben-David, Stefanie Kleimeier and Michael Viehs

No 25063, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Despite widespread awareness of the detrimental impact of CO₂ pollution on the world climate, countries vary widely in how they design and enforce environmental laws. Using novel microdata about multinational firms’ CO₂ emissions across countries, we document that firms headquartered in countries with strict environmental policies perform their polluting activities abroad in countries with relatively weaker policies. These effects are largely driven by tightened environmental policies in home countries that incentivize firms to pollute abroad rather than lenient foreign policies that attract those firms. Although firms headquartered in countries with strict domestic environmental policies are more likely to export pollution to foreign countries, they nevertheless emit less overall CO₂ globally.

JEL-codes: N50 O13 P18 Q56 R11 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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