Abstract: This paper studies the complementarity between exporting and abatement and their joint impact on the environmental performance of Chinese manufacturers. For two common air pollutants (SO2 and industrial dust), we document that (a) exporters are significantly less emissions-intensive relative to their non-exporting counterparts, and (b) this difference cannot be explained by differential rates of abatement alone. We argue that the standard heterogeneous firms, trade and emissions model cannot simultaneously match these stylized facts and propose a model that allows for export-driven emission-complementarities (such as technological upgrading). Treating accession to the World Trade Organization as a sharp reduction in trade barriers across countries, we quantify the impact of endogenous export and abatement decisions on firm-level emissions. We find that exporting reduces SO2 emissions by at least 36 percent across pollutants. Observable changes in product scope, capital-vintage, energy sourcing and R&D account for 75 percent of the empirical relationship between exporting and emissions. Abatement, in contrast, has a much smaller impact on emissions between 1999 and 2005. Using the structural model, we quantify the implied emissions taxes and the impact of trade and environmental policy alternatives on the Chinese manufacturing sector.
On campus: IB 1050
Zoom Room ID: 987 1583 4972 (password 934805)
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