Trade and the Environment: The Role of Firm Heterogeneity

Abstract

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How Green are Exporters?

“…Transfers then take place between the North and the South. By contrast, Kreickemeier and Richter () predict an overall negative effect of trade on emissions, if the emissions intensity of firms falls as firms become more productive.…”

“…However, the level of aggregation does not allow these studies to also consider possible heterogeneity at the level of the firm which would impact on the decision to export. 3 Kreickemeier and Richter (2012) suggest the existence of a 'reallocation' effect. This effect, describes the higher competitiveness (efficiency) of firms which are environmentally efficient as well.…”

“…Kreickemeier and Richter () suggest the existence of a ‘reallocation’ effect. This effect, describes the higher competitiveness (efficiency) of firms which are environmentally efficient as well.…”

Intra‐industry Trade Liberalization and the Environment

“…It is only with the addition of transboundary pollution and the assumption that the dirty country liberalizes that the world, though not both countries, can become cleaner in their framework. Kreickemeier and Richter () only consider the scale effect and find with increasing returns to scale trade can lead to lower pollution.…”

Emissions Trading, Firm Heterogeneity, and Intra-industry Reallocations in the Long Run

“…But this occurs because firms need to be more profitable to make up for the cost of pollution to stay active in the market. Now substitute (ZCP) and (24), respectively, into (21) and (26). We then see that:…”