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Outward Foreign Direct Investments Patterns of Italian Firms in the EU ETS

Simone Borghesi (), Chiara Franco () and Giovanni Marin ()
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Chiara Franco: Catholic University of Sacred Heart, Milano, Italy.

No 116, SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies

Abstract: We consider the role played by the EU Emission Trading System (EU ETS) as a possible driver of outward Foreign Direct Investments (FDI henceforth). In particular, we aim at assessing whether EU ETS has any effect on outward FDI patterns of Italian firms. Using a novel panel dataset of about 59,000 firms covering the first two phases of the EU ETS and the pre-EU ETS period, we are able to observe the patterns of FDI by destination country of firms, distinguishing between those with plants covered by the EU ETS and other firms. Results show that, on average, firms in the EU ETS do not increase their presence in other countries. However, EU ETS firms operating in sectors particularly exposed to international competition increase their outward FDI towards countries not covered by the EU ETS.

Keywords: EU ETS; FDI; carbon leakage (search for similar items in EconPapers)
JEL-codes: F23 L23 Q50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-ene, nep-env, nep-eur and nep-int
Date: 2016-01, Revised 2016-01
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Downloads: (external link) First version, 2016 (application/pdf) Revised version, 2016 (application/pdf)

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