Is Germany becoming the European pollution haven?

Arbeitspapier

Relative prices determine competitiveness of different locations. In this paper, we focus on the role of regulatory differences between Germany and other EU countries which affect the shadow price of carbon emissions. We calibrate a Melitz-type model, extended by firms' emissions and abatement decisions using data on aggregate output, trade and emissions. The parameter estimates are estimated from the German Manufacturing Census. The quantitative model allows us to recover a measure of how regulatory stringency evolved in the EU and Germany in terms of an implicit carbon price paid on emissions. This price reflects energy and carbon prices in addition to command-and-control measures and decreased from 2005 to 2019 in most sectors - both in Germany and other EU countries. The trend is more pronounced in Germany than in the rest of the EU. In counterfactual analyses, we show that this intra-EU difference has substantially increased German industrial emissions. Had the EU experienced the same decrease in implicit carbon prices as Germany, German emissions would have been substantially lower. Germany has increasingly become a pollution haven

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 23-069

Classification and Topics

• Classification: Wirtschaft ; Trade and Environment ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Industry Studies: Manufacturing: General ; Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
• Subject: Carbon emissions ; Climate Policy ; Melitz model ; Manufacturing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): von Graevenitz, Kathrine ; Rottner, Elisa ; Richter, Philipp M.
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/283591
• Last update: 10.03.2025, 11:44 AM CET