Multinational corporations and the EU emissions trading system: Asset erosion and creeping deindustrialization?

Nils aus dem Moore, Philipp Großkurth and Michael Themann

No 719, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This study investigates the causal effect of the EU Emissions Trading System (EU ETS) on firms' holdings of fixed assets as an early indicator of industrial relocation, exploiting installation level inclusion criteria of the regulation. To single out companies with particularly low relocation costs, global multinational enterprises (MNEs), we identify ownership structures for the full sample of EU ETS-firms. Matched difference-indifferences estimates provide robust evidence that contradicts the idea of an erosion of European asset bases. Baseline results indicate that the EU ETS led on average to an increase of treated firms' asset bases of 11,1%. However, for a particular subgroup of MNEs, this increase is a mere 1.3%. For these companies, the EU ETS may have induced a shift in investment priorities. While the positive overall effect is very robust, the differential effect for the subgroup cannot be extended to all samples.

Keywords: EU ETS; cap-and-trade; carbon leakage; multinational corporation (search for similar items in EconPapers)
JEL-codes: C21 F23 H23 Q54 Q58 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/171223/1/1003997643.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:719

DOI: 10.4419/86788839

Access Statistics for this paper

More papers in Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().