Discussion paper

DP14228 Trade, Transportation and the Environment

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


Forslid, R (2019), ‘DP14228 Trade, Transportation and the Environment‘, CEPR Discussion Paper No. 14228. CEPR Press, Paris & London. https://cepr.org/publications/dp14228