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

Author

Listed:
  • Simone Borghesi

    (University of Siena, Italy.)

  • Chiara Franco

    (Catholic University of Sacred Heart, Milano, Italy.)

  • Giovanni Marin

    (IRCrES-CNR, Milano, Italy.)

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.

Suggested Citation

  • Simone Borghesi & Chiara Franco & Giovanni Marin, 2016. "Outward Foreign Direct Investments Patterns of Italian Firms in the EU ETS," SEEDS Working Papers 0116, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jan 2016.
    • Handle: RePEc:srt:wpaper:0116
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    References listed on IDEAS

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    Cited by:

    1. aus dem Moore, Nils & Großkurth, Philipp & Themann, Michael, 2019. "Multinational corporations and the EU Emissions Trading System: The specter of asset erosion and creeping deindustrialization," Journal of Environmental Economics and Management, Elsevier, vol. 94(C), pages 1-26.
    2. Koch, Nicolas & Basse Mama, Houdou, 2019. "Does the EU Emissions Trading System induce investment leakage? Evidence from German multinational firms," Energy Economics, Elsevier, vol. 81(C), pages 479-492.
    3. Francois Cohen and Giulia Valacchi, 2022. "The Heterogeneous Impact of Coal Prices on the Location of Cleaner and Dirtier Steel Plants," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    4. Damien Dussaux & Francesco Vona & Antoine Dechezleprêtre, 2023. "Imported carbon emissions: Evidence from French manufacturing companies," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 593-621, May.
    5. Nicola De Vivo & Giovanni Marin, 2018. "How neutral is the choice of the allocation mechanism in cap-and-trade schemes? Evidence from the EU-ETS," Argomenti, University of Urbino Carlo Bo, Department of Economics, Society & Politics, vol. 9(9), pages 1-24, January-A.
    6. Francois Cohen & Giulia Valacchi, 2017. "The Heterogeneous Impact of Coal Prices on the Location of Dirty and Clean Steel Plants," CIES Research Paper series 55-2017, Centre for International Environmental Studies, The Graduate Institute.
    7. Dechezleprêtre, Antoine & Gennaioli, Caterina & Martin, Ralf & Muûls, Mirabelle & Stoerk, Thomas, 2022. "Searching for carbon leaks in multinational companies," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    8. Voßwinkel, Jan & Birg, Laura, 2018. "Emission Taxes, Firm Relocation, and Quality Differences," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168298, Verein für Socialpolitik / German Economic Association, revised 2018.
    9. aus dem Moore, Nils & Großkurth, Philipp & Themann, Michael, 2017. "Multinational corporations and the EU emissions trading system: Asset erosion and creeping deindustrialization?," Ruhr Economic Papers 719, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. repec:hal:spmain:info:hdl:2441/7j6trda2ip9uja53ghj5qo32rg is not listed on IDEAS
    11. Francois Cohen & Giulia Valacchi, 2017. "Do firms innovate if they can relocate? Evidence from te steel industry," CIES Research Paper series 55-2017, Centre for International Environmental Studies, The Graduate Institute.

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    More about this item

    Keywords

    EU ETS; FDI; carbon leakage;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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