Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322322 
Year of Publication: 
2024
Series/Report no.: 
Working Paper No. 18/2024
Publisher: 
Norges Bank, Oslo
Abstract: 
We show that climate transition risks can significantly disrupt supply chain networks. Specifically, suppliers affected by the California cap-and-trade program are more likely to lose customer relationships and less likely to form new ones compared to their competitors unaffected by the program. The effects are more pronounced among suppliers facing high competitive pressure and producing standardized inputs. Additionally, affected suppliers experience declines in revenues, assets, and profitability. This supply chain rewiring induced by uncoordinated climate policies is consistent with carbon leakage, as customers exposed to the program through production networks show an increase in their supply chain emission intensity.
Subjects: 
Climate finance
Carbon pricing policy
Carbon emissions
Supply chain
Product market competition
Input specificity
JEL: 
G32
Q54
Q55
Persistent Identifier of the first edition: 
ISBN: 
978-82-8379-339-0
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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