Exporting Pollution: Where Do Multinational Firms Emit CO2?

Abstract Despite widespread awareness of the detrimental impact CO2 pollution on world climate, countries vary widely in how they design and enforce environmental laws. Using novel microdata about multinational firms' emissions across countries, we document that firms headquartered with strict policies perform their polluting activities abroad relatively weaker policies. These effects are largely driven by tightened home incentivize to pollute rather than lenient foreign attract those firms. Although domestic more likely export nevertheless emit somewhat less overall globally.