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Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade

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  • Rahel Aichele

    ()

  • Gabriel J. Felbermayr

Abstract

Has the Kyoto Protocol induced carbon leakage? We conduct the first empirical ex-post evaluation of the Protocol. We derive a theoretical gravity equation for the CO2 content of trade, which accounts for intermediate inputs, both domestic and imported. The structure of our new panel database of the carbon content of sectoral bilateral trade flows allows controlling for the endogenous selection of countries into the Kyoto Protocol. Binding commitments under Kyoto have increased committed countries’ embodied carbon imports from non-committed countries by around 8% and the emission intensity of their imports by about 3%. Hence, Kyoto has indeed led to leakage.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-11/cesifo1_wp3661.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3661.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3661

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Related research

Keywords: carbon leakage; CO2 content of trade; gravity equation; Kyoto Protocol;

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  1. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 1998. "Is Free Trade Good for the Environment?," NBER Working Papers 6707, National Bureau of Economic Research, Inc.
  2. Aichele, Rahel & Felbermayr, Gabriel, 2012. "Kyoto and the carbon footprint of nations," Munich Reprints in Economics, University of Munich, Department of Economics 20163, University of Munich, Department of Economics.
  3. Kristian Behrens & Andrea R. Lamorgese & Gianmarco I.P. Ottaviano & Takatoshi Tabuchi, 2009. "Beyond the Home Market Effect: Market Size and Specialization in a Multi-Country World," KITeS Working Papers 023, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2009.
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  8. Bernstein, Paul M. & Montgomery, W. David & Rutherford, Thomas F., 1999. "Global impacts of the Kyoto agreement: results from the MS-MRT model," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 375-413, August.
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  15. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
  16. Brian R. Copeland & M. Scott Taylor, 2000. "Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol," NBER Working Papers 7657, National Bureau of Economic Research, Inc.
  17. Aakvik, Arild & Tjøtta, Sigve, 2007. "Do Collective Actions Clear Common Air? The Effect of International Environmental Protocols on Sulphur Emissions," Working Papers in Economics 10/07, University of Bergen, Department of Economics.
  18. Arik Levinson, 2006. "Unmasking the Pollution Haven Effect," Working Papers 2008-02, Department of Economics, University of Calgary, revised 01 Jan 2008.
  19. Satoshi Nakano & Asako Okamura & Norihisa Sakurai & Masayuki Suzuki & Yoshiaki Tojo & Norihiko Yamano, 2009. "The Measurement of CO2 Embodiments in International Trade: Evidence from the Harmonised Input-Output and Bilateral Trade Database," OECD Science, Technology and Industry Working Papers 2009/3, OECD Publishing.
  20. Ralph Ossa, 2011. "A “New Trade” Theory of GATT/WTO Negotiations," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 119(1), pages 122 - 152.
  21. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
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  1. Exportschlager Treibhausgas
    by faz-jpen in Fazit on 2014-02-05 15:33:30
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Cited by:
  1. Rahel Aichele & Gabriel Felbermayr & Inga Heiland, 2014. "EEG und internationaler Wettbewerb: Ist die besondere Ausgleichsregelung haltbar?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 67(02), pages 23-29, 01.
  2. Rahel Aichele & Gabriel Felbermayr, 2011. "Internationaler Handel und Carbon Leakage," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(23), pages 26-30, December.
  3. Rahel Aichele & Gabriel Felbermayr, 2013. "Estimating the Effects of Kyoto on Bilateral Trade Flows Using Matching Econometrics," The World Economy, Wiley Blackwell, vol. 36(3), pages 303-330, 03.
  4. Aichele, Rahel, 2013. "Carbon Leakage with Structural Gravity," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80011, Verein für Socialpolitik / German Economic Association.

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