IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v183y2023ics0301421523003622.html
   My bibliography  Save this article

Selling under other skies when energy prices skyrocket: How do the companies adapt their export strategy when energy prices rise?

Author

Listed:
  • Dussaux, Damien
  • Monjon, Stéphanie

Abstract

The prospect of higher carbon taxation raises concerns that these policies could hinder the ability of domestic industry to compete in export markets, especially for energy-intensive sectors. The recent jump in energy prices leads to even greater worries. This paper investigates the impact of a change in energy prices on export patterns of manufacturing firms using a large panel of French firms observed from 2001 to 2015. The identification strategy uses a fixed weight energy price index as a shift-share instrumental variable for the average energy cost. For the average firm we find that a 10% increase in the energy cost is associated with a 3.6% decrease in total export value, a 1.3% decrease in the number of export destinations, and a 2.3% increase in export prices. But there are substantial heterogeneities between firms facing a similar increase in energy costs and the impact of an energy cost increase differs from one destination export to another.

Suggested Citation

  • Dussaux, Damien & Monjon, Stéphanie, 2023. "Selling under other skies when energy prices skyrocket: How do the companies adapt their export strategy when energy prices rise?," Energy Policy, Elsevier, vol. 183(C).
  • Handle: RePEc:eee:enepol:v:183:y:2023:i:c:s0301421523003622
    DOI: 10.1016/j.enpol.2023.113777
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421523003622
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.enpol.2023.113777?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    2. Fontagné, Lionel & Martin, Philippe & Orefice, Gianluca, 2018. "The international elasticity puzzle is worse than you think," Journal of International Economics, Elsevier, vol. 115(C), pages 115-129.
    3. Antoine Berthou & Lionel Fontagné, 2016. "Variable Trade Costs, Composition Effects and the Intensive Margin of Trade," The World Economy, Wiley Blackwell, vol. 39(1), pages 54-71, January.
    4. Arezki, Rabah & Fetzer, Thiemo & Pisch, Frank, 2017. "On the comparative advantage of U.S. manufacturing: Evidence from the shale gas revolution," Journal of International Economics, Elsevier, vol. 107(C), pages 34-59.
    5. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    6. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, vol. 87(1), pages 134-146.
    7. Sato, Misato & Dechezleprêtre, Antoine, 2015. "Asymmetric industrial energy prices and international trade," Energy Economics, Elsevier, vol. 52(S1), pages 130-141.
    8. Kalina Manova & Zhiwei Zhang, 2012. "Export Prices Across Firms and Destinations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 379-436.
    9. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, September.
    10. Joseph E. Aldy & William A. Pizer, 2015. "The Competitiveness Impacts of Climate Change Mitigation Policies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 565-595.
    11. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    12. repec:dau:papers:123456789/10122 is not listed on IDEAS
    13. repec:hal:spmain:info:hdl:2441/6apm7lruv088iagm4rv2c33jtg is not listed on IDEAS
    14. Joshua Linn, 2008. "Energy Prices and the Adoption of Energy‐Saving Technology," Economic Journal, Royal Economic Society, vol. 118(533), pages 1986-2012, November.
    15. Chen, Shiu-Sheng & Hsu, Kai-Wei, 2012. "Reverse globalization: Does high oil price volatility discourage international trade?," Energy Economics, Elsevier, vol. 34(5), pages 1634-1643.
    16. repec:hal:spmain:info:hdl:2441/3lmdaefcr886ao8sahjmam30ke is not listed on IDEAS
    17. Philippon, Thomas & Gutierrez, German, 2018. "How EU Markets Became More Competitive Than US Markets: A Study of Institutional Drift," CEPR Discussion Papers 12983, C.E.P.R. Discussion Papers.
    18. Kodjovi EKLOU & Stefania FABRIZIO & Roland Kangni KPODAR, 2019. "Export competitiveness - Fuel Price nexus in Developing Countries: Real or False Concern?," Working Papers P249, FERDI.
    19. Sato, Misato & Singer, Gregor & Dussaux, Damien & Lovo, Stefania, 2019. "International and sectoral variation in industrial energy prices 1995–2015," Energy Economics, Elsevier, vol. 78(C), pages 235-258.
    20. Sadorsky, Perry, 2008. "Assessing the impact of oil prices on firms of different sizes: Its tough being in the middle," Energy Policy, Elsevier, vol. 36(10), pages 3854-3861, October.
    21. Chan,H. Ron & Manderson,Edward John Matlock & Zhang,Fan, 2017. "Energy prices and international trade : incorporating input-output linkages," Policy Research Working Paper Series 8076, The World Bank.
    22. St�phanie Monjon & Philippe Quirion, 2011. "A border adjustment for the EU ETS: reconciling WTO rules and capacity to tackle carbon leakage," Climate Policy, Taylor & Francis Journals, vol. 11(5), pages 1212-1225, September.
    23. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    24. Mirabelle Muûls & Mauro Pisu, 2009. "Imports and Exports at the Level of the Firm: Evidence from Belgium," The World Economy, Wiley Blackwell, vol. 32(5), pages 692-734, May.
    25. Medin, Hege, 2003. "Firms' export decisions--fixed trade costs and the size of the export market," Journal of International Economics, Elsevier, vol. 61(1), pages 225-241, October.
    26. Florens Flues & Benjamin Johannes Lutz, 2015. "Competitiveness Impacts of the German Electricity Tax," OECD Environment Working Papers 88, OECD Publishing.
    27. Costantini, Valeria & Mazzanti, Massimiliano, 2012. "On the green and innovative side of trade competitiveness? The impact of environmental policies and innovation on EU exports," Research Policy, Elsevier, vol. 41(1), pages 132-153.
    28. Rammer, Christian & Gottschalk, Sandra & Peneder, Michael & Wörter, Martin & Stucki, Tobias & Arvanitis, Spyros, 2017. "Does energy policy hurt international competitiveness of firms? A comparative study for Germany, Switzerland and Austria," Energy Policy, Elsevier, vol. 109(C), pages 154-180.
    29. T.N. Srinivasan & Vani Archana, 2011. "Determinants of Export Decision of Indian Firms: A Primary Data Analysis," Journal of Quantitative Economics, The Indian Econometric Society, vol. 9(2), pages 6-35, July.
    30. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    31. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, vol. 87(1), pages 134-146.
    32. Laursen, Keld & Meliciani, Valentina, 2010. "The role of ICT knowledge flows for international market share dynamics," Research Policy, Elsevier, vol. 39(5), pages 687-697, June.
    33. Damien Dussaux, 2020. "The joint effects of energy prices and carbon taxes on environmental and economic performance: Evidence from the French manufacturing sector," OECD Environment Working Papers 154, OECD Publishing.
    34. Aurélien Saussay & Misato Sato, 2018. "The Impacts of Energy Prices on Industrial Foreign Investment Location: Evidence from Global Firm Level Data," Working Papers hal-03475473, HAL.
    35. repec:dau:papers:123456789/7940 is not listed on IDEAS
    36. Surender Kumar & Prerna Prabhakar, 2020. "Industrial energy prices and export competitiveness: evidence from India," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 1-20, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    2. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    3. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    4. repec:spo:wpecon:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    5. Francesco Serti & Chiara Tomasi, 2014. "Export and import market-specific characteristics," Empirical Economics, Springer, vol. 47(4), pages 1467-1496, December.
    6. repec:spo:wpmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    7. Vincenzo Verardi & Joachim Wagner, 2021. "Productivity Premia for German Manufacturing Firms Exporting to the Euro-area and Beyond: First Evidence from Robust Fixed Effects Estimations," World Scientific Book Chapters, in: Joachim Wagner (ed.), MICROECONOMETRIC STUDIES OF FIRMS’ IMPORTS AND EXPORTS Advanced Methods of Analysis and Evidence from German Enterprises, chapter 7, pages 87-109, World Scientific Publishing Co. Pte. Ltd..
    8. Macedoni, Luca & Weinberger, Ariel, 2022. "Quality heterogeneity and misallocation: The welfare benefits of raising your standards," Journal of International Economics, Elsevier, vol. 134(C).
    9. Fernandes,Ana Margarida & Klenow,Peter J. & Meleshchuk,Sergii & Pierola,Martha Denisse & Rodriguez-Clare,Andres, 2018. "The Intensive Margin in Trade," Policy Research Working Paper Series 8625, The World Bank.
    10. Federico Esposito, 2016. "Risk Diversification and International Trade," 2016 Meeting Papers 302, Society for Economic Dynamics.
    11. Federico J. Diez & Jesse Mora & Alan C. Spearot, 2016. "Firms in international trade," Working Papers 16-25, Federal Reserve Bank of Boston.
    12. Bas, Maria & Mayer, Thierry & Thoenig, Mathias, 2017. "From micro to macro: Demand, supply, and heterogeneity in the trade elasticity," Journal of International Economics, Elsevier, vol. 108(C), pages 1-19.
    13. repec:wsr:ecbook:2013:i:iv-005 is not listed on IDEAS
    14. Melitz, Marc J. & Redding, Stephen J., 2014. "Heterogeneous Firms and Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 1-54, Elsevier.
    15. Yvonne Wolfmayr & Elisabeth Christen & Michael Pfaffermayr, 2013. "Pattern, Determinants and Dynamics of Austrian Service Exports – A Firmlevel Analysis," FIW Research Reports series IV-005, FIW.
    16. Esposito, Federico, 2019. "Demand Risk and Diversification through Trade," MPRA Paper 99875, University Library of Munich, Germany.
    17. Chan, Jackie M.L. & Manova, Kalina, 2015. "Financial development and the choice of trade partners," Journal of Development Economics, Elsevier, vol. 116(C), pages 122-145.
    18. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2013. "Product and process productivity: Implications for quality choice and conditional exporter premia," Journal of International Economics, Elsevier, vol. 91(1), pages 53-67.
    19. Antonio Navas & Francesco Serti & Chiara Tomasi, 2020. "The role of the gravity forces on firms’ trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 1059-1097, August.
    20. Péter Harasztosi, 2016. "Export spillovers in Hungary," Empirical Economics, Springer, vol. 50(3), pages 801-830, May.
    21. Redding, Stephen & Weinstein, David, 2017. "Aggregating From Micro to Macro Patterns of Trade," CEPR Discussion Papers 12446, C.E.P.R. Discussion Papers.
    22. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2018. "Global Firms," Journal of Economic Literature, American Economic Association, vol. 56(2), pages 565-619, June.
    23. Fontagné, Lionel & Orefice, Gianluca & Piermartini, Roberta & Rocha, Nadia, 2015. "Product standards and margins of trade: Firm-level evidence," Journal of International Economics, Elsevier, vol. 97(1), pages 29-44.
    24. Mr. Kangni R Kpodar & Ms. Stefania Fabrizio & Kodjovi M. Eklou, 2019. "Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?," IMF Working Papers 2019/025, International Monetary Fund.
    25. Paul S. Segerstrom & Ignat Stepanok, 2018. "Learning How To Export," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(1), pages 63-92, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:183:y:2023:i:c:s0301421523003622. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.