DP14228 Trade, Transportation and the Environment

Author(s): Rikard Forslid
Publication Date: December 2019
Keyword(s): Emissions, Trade, Transportation
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14228

This paper analyzes the environmental impact of emissions related to trade and trans- portation. 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 emission-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.