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Exporting Pollution: Where Do Multinational Firms Emit CO 2 ?

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  • Itzhak Ben-David
  • Stefanie Kleimeier
  • Michael Viehs

Abstract

Despite widespread awareness of the detrimental impact of CO 2 pollution on the world climate, countries vary widely in how they design and enforce environmental laws. Using novel microdata about multinational firms’ CO 2 emissions across countries, we document that firms headquartered in countries with strict environmental policies perform their polluting activities abroad in countries with relatively weaker policies. These effects are largely driven by tightened environmental policies in home countries that incentivize firms to pollute abroad rather than lenient foreign policies that attract those firms. Although firms headquartered in countries with strict domestic environmental policies are more likely to export pollution to foreign countries, they nevertheless emit less overall CO 2 globally.

Suggested Citation

  • Itzhak Ben-David & Stefanie Kleimeier & Michael Viehs, 2018. "Exporting Pollution: Where Do Multinational Firms Emit CO 2 ?," NBER Working Papers 25063, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25063
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    1. Torsten Ehlers & Benoit Mojon & Frank Packer, 2020. "Green bonds and carbon emissions: exploring the case for a rating system at the firm level," BIS Quarterly Review, Bank for International Settlements, September.

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    More about this item

    JEL classification:

    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P18 - Economic Systems - - Capitalist Systems - - - Energy; Environment
    • 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
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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