Exporting pollution: Where do multinational firms emit CO2?

Abstract

exporting pollution: where do multinational firms emit co2? itzhak ben-david, stefanie kleimeier, and michael viehs nber working paper no. 25063 october 2018, revised in september 2020 jel no. n50,o13,p18,q56,r11 abstract despite widespread awareness of the detrimental impact of co2 pollution on the world climate, countries vary widely in how they design and enforce environmental laws. using novel microdata about multinational firms’ co2 emissions across countries, we document that firms headquartered in countries with strict environmental policies perform their polluting activities abroad in countries with relatively weaker policies. these effects are largely driven by tightened environmental policies in home countries that incentivize firms to pollute those firms. although firms abroad rather headquartered in countries with strict domestic environmental policies are more likely to export pollution to foreign countries, they nevertheless emit less overall co2 globally. lenient foreign policies that attract than michael viehs university of oxford smith school of enterprise and the environment and hermes investment management 150 cheapside london ec2v 6et united kingdom michael.viehs@gmail.com itzhak ben-david the ohio state university fisher college of business 606a fisher hall columbus, oh 43210-1144 and nber ben-david.1@osu.edu stefanie kleimeier maastricht university school of business and economics open universiteit faculty of management, science & technology and …

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