Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2020:2: Trade, Transportation and the Environment

Rikard Forslid ()
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Rikard Forslid: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: This paper analyzes the environmental impact of emissions related to trade and transportation. It is shown that transportation may in principle lower global emissions if the production sector is dirtier than the transport sector. The measure of a sector´s dirtiness is related to the emissions taxes and the abatement efficiency within that sector. It is shown that a firm´s abatement efficiency can be calculated from the emissions-to-cost ratio times the emissions tax. Using Swedish data to rank 5-digit industries in terms of their dirtiness reveals that several production sectors have a higher dirtiness index than transportation does.

Keywords: Emissions; Trade; Transportation

JEL-codes: F10; F18

22 pages, January 31, 2020

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