Year of Award


Document Type


Degree Type

Master of Arts (MA)

Degree Name


Department or School/College


Committee Chair

Derek Kellenberg

Commitee Members

Amanda Dawsey, Abhishek Chatterjee


Carbon Tax, International Trade, Environmental Economics, Carbon Leakage


University of Montana

Subject Categories

International Economics


Pollution leakage has existed as a concern of both trade theory and domestic policy since questions of the environmental impact of economic activity entered the literature. With the growing threat of climate change and the proliferation of carbon pricing policies around the world, the value of robust estimate of the extent of carbon leakage is particularly acute. Using a pseudo poisson maximum-likelihood (PPML) estimator, I examine French trade volumes to identify potential evidence of carbon leakage. To that end, the net carbon tax between France and its trading partners is regressed on the trade volume in 318 carbon intensive goods. Results show that the export percentage of trade volume is estimated to decrease by 1.1 percent in response to a dollar increase in the net carbon tax. Beyond that, the value of exports directly also decreases as the net tax increases. These variables are assessed at the industry level and across EU membership. The results suggest that environmentally damaging activity moves out from under policies designed to control the associated externalities. II



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