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Abatement expenditures, technology choice, and environmental performance: Evidence from firm responses to import competition in Mexico

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  • Gutiérrez, Emilio
  • Teshima, Kensuke

Abstract

Abatement expenditures are not the only available tool for firms to decrease emissions. Technology choice can also indirectly affect environmental performance. We assess the impact of import competition on plants' environmental outcomes. In particular, exploiting a unique combination of Mexican plant-level and satellite imagery data, we measure the effect of tariff changes due to free-trade agreements on three main outcomes: plants' fuel use, plants' abatement expenditures, and measures of air pollution around plants' location. Our findings show that import competition induced plants in Mexico to increase energy efficiency, reduce emissions, and in turn reduce direct investment in environmental protection. Our findings suggest that the general technology upgrading effect of any policy could be an important determinant of environmental performance in developing countries and that this effect may not be captured in abatement data.

Suggested Citation

  • Gutiérrez, Emilio & Teshima, Kensuke, 2018. "Abatement expenditures, technology choice, and environmental performance: Evidence from firm responses to import competition in Mexico," Journal of Development Economics, Elsevier, vol. 133(C), pages 264-274.
    • Handle: RePEc:eee:deveco:v:133:y:2018:i:c:p:264-274
    DOI: 10.1016/j.jdeveco.2017.11.004
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    More about this item

    Keywords

    Environment; Technological change; Remote sensing data; Plant-level response to trade;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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