Webinar: Trade, Firm-Delocation, and Optimal Climate Policy

21  January 2021    4:00 pm CET

Ahmad Lashkaripour, Indiana University

In cooperation with:


Online event - See registration link below


The presentation is based on a publication with the same title.

Ahmad Lashkaripour

To what extent can trade policy help reduce global carbon emissions? We examine this question using a multi-country multi-industry general equilibrium trade model with transboundary carbon externalities. Our framework accommodates firm-delocation in response to policy, multi-lateral carbon leakage, and returns to scale in production and abatement. Our central result is a set of simple formulas for unilaterally optimal trade and carbon taxes in an open economy. The optimal policy consists of (i) a uniform carbon tax across all industries; (ii) industry-level production subsidies that restore marginal-cost-pricing independent of the industry’s carbon intensity; (iii) industry-level import taxes that penalize carbon-intensive imports but less so in high-returns-to-scale industries; and (vi) industry-level export subsidies that, in addition to improving the terms of trade, promote clean exports against carbon-intensive foreign competition. Mapping our formulas to data, we find that trade taxes can replicate only around 3% of the carbon reduction attainable under (first-best) cooperative global carbon taxes. This lack of effectiveness is partly driven by a tension between the carbon-reducing and terms-of-trade rationales for trade taxation under scale economies. Trade taxes, however, can be remarkably effective at enforcing international climate agreements even in the presence of scale economies and firm-delocation effects.

The presentation, when available, will be posted online after the webinar.

Registration link: https://my.demio.com/ref/dBpcEhy15KvsmpcJ
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The webinar will take place at 4:00 pm (Vienna), 10:00 am (Indiana).

Ahmad Lashkaripour is Assistant Professor of Economics at the Indiana University (USA). He received his Ph.D. from the Pennsylvania State University in 2014. His research is focused on quantifying the consequences of globalization and international trade agreements. Ahmad's work has been published in the American Economic Journal, the Journal of International Economics, and the Journal of the European Economics Association. His current research measures the effectiveness of trade policy in tackling misallocation and climate change.