Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/331585 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12119
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
Although the environmental impact of trade has been a long-standing concern, there is still only scant evidence on the channels through which international market access affects pollution. In this paper, we exploit the unique episode of China's world market integration in the early 2000s to provide direct empirical evidence on three such mechanisms. We combine granular satellite data on air pollution with detailed information on manufacturing firms and coal power plants, and leverage exogenous foreign demand shocks for identification. Three main findings emerge: exporting firms reduce local pollution (scope-1); pollution levels around coal power plants rise due to regional export shocks (scope-2); and upstream suppliers reduce pollution in the face of export demand shocks to downstream firms (scope-3). Our findings point to China's reliance on coal power plants to fuel its export-driven growth as one of the main drivers of the rise in pollution.
Subjects: 
trade
pollution
satellite
supply chain
coal power plants
electricity
JEL: 
D22
F18
F64
Q53
Q56
Document Type: 
Working Paper
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