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Environmental policy and firm selection in the open economy

Udo Kreickemeier () and Philipp M. Richter

No 15, KCG Working Papers from Kiel Centre for Globalization (KCG)

Abstract: In this paper, we analyse 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 labour towards exporting firms. Domestic aggregate 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.

Keywords: Trade and environment; Heterogeneous firms; Unilateral environmental policy; Emissions leakage (search for similar items in EconPapers)
JEL-codes: F18 F12 Q58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-int
Date: 2019
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https://www.econstor.eu/bitstream/10419/200402/1/1668940752.pdf (application/pdf)

Related works:
Working Paper: Environmental Policy and Firm Selection in the Open Economy (2019) Downloads
Working Paper: Environmental Policy and Firm Selection in the Open Economy (2019) Downloads
Working Paper: Environmental policy and firm selection in the open economy (2019) Downloads
Working Paper: Environmental policy and firm selection in the open economy (2019) Downloads
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