The Carbon Footprint of Multinational Production

The paper presented in this ZEW Research Seminar studys how multinational production affects climate change. Microdata reveal that the emission rate of a foreign-owned plant increases with the emission rate of its home country, suggesting that firms bring green technology with them when operating abroad. The authors develop and quantify a multi-country general equilibrium model of multinational production, trade, and energy to assess how policies encouraging multinational production would affect global carbon emissions and welfare.