Exporting Pollution: Where Do Multinational Firms Emit Co2?

61 Pages Posted: 8 Oct 2018 Last revised: 26 Jun 2021

See all articles by Itzhak Ben-David

Itzhak Ben-David

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Stefanie Kleimeier

Maastricht University - Department of Finance; Open Universiteit; Univ. of Stellenbosch Business School

Michael Viehs

Oxford University Smith School of Enterprise and the Environment; European Centre for Corporate Engagement (ECCE)

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Date Written: October 2018

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 abroad rather than lenient foreign policies that attract those firms. Although firms headquartered in countries with strict domestic environmental policies are more likely to export pollution to foreign countries, they nevertheless emit less overall CO2 globally.

Suggested Citation

Ben-David, Itzhak and Kleimeier, Stefanie and Viehs, Michael, Exporting Pollution: Where Do Multinational Firms Emit Co2? (October 2018). NBER Working Paper No. w25063, Available at SSRN: https://ssrn.com/abstract=3262351

Itzhak Ben-David (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

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Stefanie Kleimeier

Maastricht University - Department of Finance ( email )

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Open Universiteit

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Univ. of Stellenbosch Business School

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Michael Viehs

Oxford University Smith School of Enterprise and the Environment ( email )

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United Kingdom
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European Centre for Corporate Engagement (ECCE) ( email )

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