The Competitiveness Impacts of Climate Change Mitigation Policies

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The Competitiveness Impacts of Climate Change Mitigation Policies

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Title: The Competitiveness Impacts of Climate Change Mitigation Policies
Author: Aldy, Joseph Edgar; Pizer, William

Note: Order does not necessarily reflect citation order of authors.

Citation: Aldy, Joseph, and William Pizer. 2011. The Competitiveness Impacts of Climate Change Mitigation Policies. HKS Faculty Research Working Paper Series RWP11-047, John F. Kennedy School of Government, Harvard University
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Abstract: The pollution haven hypothesis suggests that unilateral domestic emission mitigation policies could cause adverse “competitiveness” impacts on domestic manufacturers as they lose market share to foreign competitors and relocate production activity – and emissions – to unregulated economies. We construct a precise definition of competitiveness impacts appropriate for climate change regulation that can be estimated exclusively with domestic production and net import data. We use this definition and a 20+ year panel of 400+ U.S. manufacturing industries to estimate the effects of energy prices, which is in turn used to simulate the impacts of carbon pricing policy. We find that a U.S.-only $15 per ton CO2 price will cause competitiveness effects on the order of a 1.0 to 1.3 percent decline in production among the most energy-intensive manufacturing industries. This amounts to roughly one-third of the total impact of a carbon pricing policy on these firms’ economic output.
Published Version: http://web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=8115
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:5688779
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