How Does State-Level Carbon Pricing in the United States Affect Industrial Competitiveness?

Pricing carbon emissions from an individual jurisdiction may harm the competitiveness of local firms, causing leakage and economic activity to other regions. Past research concentrates on national prices, but impacts subnational prices could be more severe due openness regional economies. We specify a flexible model capture competition between plant in state with electric sector pricing plants states or countries without such pricing. Treating energy as proxy for we estimate parameters using confidential plant-level Census data, 1982–2011. simulate effects manufacturing output employment covering Regional Greenhouse Gas Initiative (RGGI) Northeast Mid-Atlantic A price $10 per metric ton electricity reduces regulated region by 2.1 percent, raises nearby 0.8 although these estimates do not account revenue recycling RGGI that mitigate changes. The are broadly similar. National falls just 0.1 suggesting domestic opposed foreign facilities gain most jobs