Outward Foreign Direct Investment Patterns of Italian Firms in the European Union's Emission Trading Scheme

We consider the role played by the European Union's Emissions Trading System (EU ETS) as a possible driver of outward foreign direct investment (FDI) for Italian manufacturing firms. Using a panel dataset of about 22,000 firms covering the first two phases of the EU ETS and the period before th...

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Bibliographic Details
Published inThe Scandinavian journal of economics Vol. 122; no. 1; pp. 219 - 256
Main Authors Borghesi, Simone, Franco, Chiara, Marin, Giovanni
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.01.2020
Subjects
Carbon leakage
Companies
Emissions
Emissions trading
EU ETS
foreign direct investment
Foreign investment
Foreign subsidiaries
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Summary:We consider the role played by the European Union's Emissions Trading System (EU ETS) as a possible driver of outward foreign direct investment (FDI) for Italian manufacturing firms. Using a panel dataset of about 22,000 firms covering the first two phases of the EU ETS and the period before the EU ETS, we measure the patterns of FDI towards countries not covered by the EU ETS. The results show that the EU ETS had a weak effect on the number of new subsidiaries abroad (extensive margin), while it had a larger impact on production taking place in foreign subsidiaries (intensive margin), especially in trade‐intensive sectors.
ISSN:0347-0520
1467-9442
DOI:10.1111/sjoe.12323