Exporting Pollution: Where Do Multinational Firms Emit CO2?

Exporting Pollution: Where Do Multinational Firms Emit CO2?

Itzhak Ben-David, Yeejin Jang, Stefanie Kleimeier, Michael Viehs

Series number :

Serial Number: 
717/2020

Date posted :

December 08 2020

Last revised :

December 08 2020
SSRN Share

Keywords

  • Pollution • 
  • Production • 
  • climate change • 
  • CO2 Emission • 
  • Environmental Regulation

Despite widespread awareness of the detrimental impact of CO2 pollution on the world climate, countries vary widely in how they design and enforce environmental laws.

Using novel microdata about multinational firms’ CO2 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 somewhat less overall CO2 globally.

Authors

Professor
Real name:
Itzhak Ben-David
The Ohio State University Fisher College of Business
Dr
Real name:
Academic Member
University of New South Wales
Real name:
Stefanie Kleimeier