Greenhouse-Gas Emission Controls and Firm Locations in North–South Trade

Jota Ishikawa, Toshihiro Okubo

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper studies greenhouse-gas emission (GHG) controls in the presence of international carbon leakage through international firm relocation. In a new economic geography model with two countries (‘North’ and ‘South’), only North sets a target for GHG emissions. We compare the consequences of emission quotas and emission taxes under trade liberalization on location of two manufacturing sectors with different emission intensities and degrees of carbon leakage. With low trade costs, further trade liberalization increases global emissions by facilitating carbon leakage. Regulation by quotas leads to spatial sorting, resulting in less carbon leakage and less global emissions than regulation by taxes.

Original languageEnglish
Pages (from-to)637-660
Number of pages24
JournalEnvironmental and Resource Economics
Volume67
Issue number4
DOIs
Publication statusPublished - 2017 Aug 1

    Fingerprint

Keywords

  • Carbon leakage
  • Emission quota
  • Emission tax
  • Firm relocation
  • Global warming
  • Trade liberalization

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

Cite this