The impact of unilateral climate policy with endogenous plant location and market size asymmetry

Arbeitspapier

This paper analyses the impact of unilateral climate policy on firms' international location strategies in emission-intensive sectors, when countries differ in terms of market size. The cases of partial and total relocation via foreign direct investment are separately considered. A simple international duopoly model highlights the differences between short-term and long-term effects. In the short-term no change in location is a likely outcome in very capital-intensive sectors, and when there is a strategy shift this takes the form of partial instead of total relocation. In the long-run total relocation becomes a feasible outcome. However we found that, when tighter mitigation measures are introduced by the larger country and unit transport cost is high, with a pronounced market asymmetry the probability of firms not relocating abroad is high even in the long-term. The welfare implications of unilateral environmental measures are assessed considering global industrial pollution and accounting for shifts in location strategy.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Nota di Lavoro ; No. 2010,107

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Multinational Firms; International Business ; Environmental Economics: Government Policy
• Thema: Foreign Direct Investment ; Carbon Leakage ; Climate Policy ; Relocation ; Transport Costs ; Welfare

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Sanna-Randaccio, Francesca ; Sestini, Roberta
• Ereignis: Veröffentlichung
• (wer): Fondazione Eni Enrico Mattei (FEEM)
• (wo): Milano
• (wann): 2010

Weitere Informationen

• Handle: http://hdl.handle.net/10419/43502
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ