Unilateral tightening of environmental regulation is often considered to cause regulated industries to locate at places with lower compliance cost. The pollution haven effect may be offset, however, when endogenous technical change and factor reallocation can compensate increased compliance...

This paper analyzes the impact of vertical linkages on the international effects of environmental policy. With vertical linkages, stricter environmental policy at home indirectly reduces pollution in the rest of the world. This spillback effect can reinforce the free-rider problem that arises...

Has the Kyoto Protocol induced carbon leakage? We conduct the first empirical ex post evaluation of the protocol. We derive a theoretical gravity equation for the carbon dioxide content of trade, which accounts for intermediate inputs, both domestic and imported. The structure of our new panel...

The prospects for an international agreement within the United Nations Framework on Climate Change (UNFCCC) resulting in a common carbon price ‐ such as a global cap and trade scheme ‐ can for now only be seen as a long term goal. In the meantime, we have to work in a world of unilateral...

This paper provides an empirical analysis of the evidence of carbon leakage from the European primary aluminium industry during the first 6 ½ years of the European Union Emissions Trading Scheme (EU ETS). The findings suggest that while rising electricity prices in several major producer...

Reflecting the emphasis of recent work in the field of trade and the environment, this review focuses on empirical issues, primarily econometric estimates of the pollution haven effect and simulation-based calculations of carbon leakage. A brief discussion of the theory explains why intuition...

Unilateral carbon policies are inefficient due to the fact that they generally involve emission reductions in countries with high marginal abatement costs and because they are subject to carbon leakage. In this paper, we ask whether the use of carbon tariffs—tariffs on the carbon embodied in...

The efficiency of unilateral climate policies may be hampered by carbon leakage and competitiveness losses. A widely discussed policy option to reduce leakage and protect competitiveness of heavy industries is to impose Border Carbon Adjustments (BCA) to non regulated countries, which remains...

G20 committed to removing inefficient fossil fuel subsidies at the Pittsburgh Summit. China is a large energy consumer with large subsidies. Then, how large are impacts of subsidy removal, and how to mitigate negative impacts? This paper simulates the potential impacts of subsidy removal, and...

China is a large developing country with high carbon intensity. It is likely that China will have to face the challenge of CBTA (carbon motivated border tax adjustments) in future. Meanwhile, CBTA would create price gap between CBTA users and target countries, and change the competitiveness of...