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Can Trade Integration Reduce Emissions from Production? The Product Composition Channel

Author

Listed:
  • Lu, Yue
  • Ma, Minghui
  • Gao, Longfei
  • Tang, Yao

Abstract

In a trade model incorporating within-firm productivity differences in intermediate products, we show that specialization in the production of intermediate products enabled by decreased trade costs can reduce firm-level emissions. Using firm-level data from China (1998-2012), we provide supporting evidence in the context of domestic trade. Increased domestic trade integration, associated with the expansion of China's railway network, reduces emissions of sulfur dioxide, carbon dioxide, and other pollutants. Counterfactual analysis indicates that without the 1.88% (1,203-kilometer) railway expansion in 2005—--the year in the middle of our sample period, as an example---national SO2 emissions would have been 0.43% higher.

Suggested Citation

  • Lu, Yue & Ma, Minghui & Gao, Longfei & Tang, Yao, 2024. "Can Trade Integration Reduce Emissions from Production? The Product Composition Channel," MPRA Paper 121156, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121156
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    File URL: https://mpra.ub.uni-muenchen.de/121156/1/MPRA_paper_121156.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    emissions; market access; railway network; Chinese manufacturing firms;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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