Stathopoulou, E., "Emissions leakage and environmental awareness" | WEBINAR

Monday, October 14, 2024

Title: "Emissions leakage and environmental awareness"

Speaker: Dr Eleni Stathopoulou, University of Sheffield

Host: Assistant Professor Efthymios Athanasiou, Department of Economics, Athens University of Economics and Business

Time: 15.30 -17.00

WEBINAR

Abstract: In an international duopoly context, we construct a model where two horizontally differentiated goods are produced by two firms located in two separate countries. We show that when consumers in one country display environmental awareness for local pollution only, it can cause emissions leakage as consumers shift their demand to the good produced abroad, even though the domestic firm tries to offset the contraction in its demand by employing a cleaner technology. This highlights that, even in the absence of unilateral environmental policies, asymmetry in the environmental awareness can be a cause of emissions leakage. We then examine the scenario where domestic consumers care about global pollution and we find that the shift from local to global pollution consciousness can mitigate the extent of emission leakage as firms in both countries have the incentive to undertake abatement investments that reduce the emission intensity in both countries.