IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-3-030-32296-0_2.html
   My bibliography  Save this book chapter

Environmental Regulatory Arbitrage by Business Groups in the Context of the European Union’s Emission Trading System (EU-ETS)

In: Regulations in the Energy Industry

Author

Listed:
  • Frederiek Schoubben

    (KU Leuven, Faculty of Economics and Business)

Abstract

Although the EU-ETS is implemented in all member states as the cornerstone of Europe’s climate policy, there is still significant cross-country variation in the stringency of its implementation. In this chapter, we explore how these differences between home and host countries of international business groups explain carbon emissions at the affiliate level. Using an extensive dataset of business groups with facilities covered by the EU-ETS, we find evidence of intragroup regulatory arbitrage (RA) in that affiliates with foreign parent companies show significantly higher carbon emissions compared to domestically owned affiliates. Moreover, stringency of the host country’s implementation of EU-ETS only reduces affiliates’ emissions for domestically owned affiliates while stringent implementation at parent level seems to exacerbate carbon emissions at affiliate level. However, this RA-behavior is strongly influenced by the affiliate’s carbon allowances. In line with recent results on the effectiveness of the EU-ETS, affiliates with carbon allowance shortages (under-allocated) provide fewer opportunities for intragroup regulatory arbitrage. Our results therefore not only stress the importance of cross-country uniformity of EU-ETS implementation but also the allocation mechanism at firm level for the proper functioning of the cap-and-trade system.

Suggested Citation

  • Frederiek Schoubben, 2020. "Environmental Regulatory Arbitrage by Business Groups in the Context of the European Union’s Emission Trading System (EU-ETS)," Springer Books, in: André Dorsman & Özgür Arslan-Ayaydin & James Thewissen (ed.), Regulations in the Energy Industry, pages 7-31, Springer.
  • Handle: RePEc:spr:sprchp:978-3-030-32296-0_2
    DOI: 10.1007/978-3-030-32296-0_2
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Deng, Ziliang & Huang, Eryue & Wang, Pei, 2023. "A power-dependence perspective of the pollution haven hypothesis," Journal of Business Research, Elsevier, vol. 169(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-3-030-32296-0_2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.