The carbon dioxide emissions of firms: A spatial analysis

In order to gain a greater understanding of firms' 'environmental behaviour' this paper explores the factors that influence firms' emissions intensities and provides the first analysis of the determinants of firm level carbon dioxide (CO₂) emissions. Focussing on Japan, the paper also examines whether firms' CO₂ emissions are influenced by the emissions of neighbouring firms and other possible sources of spatial correlation. Results suggest that size, the capital-labour ratio, R&D expenditure, the extent of exports and concern for public profile are the key determinants of CO₂ emissions. Local lobbying pressure, as captured by regional community characteristics, does not appear to play a role, however emissions are found to be spatially correlated. This raises implications for the manner in which the environmental performance of firms is modelled in future.