Greenhouse-gas Emission Controls and International Carbon Leakage through Trade Liberalization

• Ishikawa Jota

  Hitotsubashi University and RIETI

• Okubo Toshihiro

  Keio University

Abstract

Using the footloose capital model with two countries, this paper studies different impacts of emission taxes and quotas on firm location and global emissions under trade liberalization. If only one country (North) sets a target of emissions, firms may have incentive to relocate to the other country (South). That is, the pollution haven effect could arise. We show that a further decrease in trade costs, given an emission regulation in North, increases firm relocation and global emissions only if trade costs are relatively low. Moreover, compared with emission taxes, emission quotas moderate firm relocation, which results in less pollution haven and hence less global emissions. <br>JEL:F18, Q54

Journal

• The International Economy

  The International Economy 19 (0), 1-22, 2016

  The Japan Society of International Economics

Keywords

• emission taxes
• emission quotas
• pollution haven
• firm relocation
• trade liberalization

Details

• CRID: 1390282680388266880
• NII Article ID: 130005549214
• DOI: 10.5652/internationaleconomy.ie2016.02.ji
• ISSN: 18844367
• ISSN: 21866074
• Web Site: https://www.jstage.jst.go.jp/article/internationaleconomy/19/0/19_ie2016.02.ji/_pdf
• Text Lang: en
• Data Source:
  • JaLC
  • Crossref
  • CiNii Articles
  • KAKEN
• Abstract License Flag: Disallowed