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The Carbon Cost of Competitive Pressure

Author

Listed:
  • Vesa Pursiainen

    (University of St. Gallen; Swiss Finance Institute)

  • Hanwen Sun

    (University of Bath, School of Management)

  • Yue Xiang

    (Durham University)

Abstract

Higher exposure to competition – measured by product fluidity – is associated with higher carbon emission intensity. This result is robust to using instrumental variables to obtain exogenous variation in fluidity. The positive relationship between competition and carbon emissions is stronger for firms in areas less concerned about climate change. It is also stronger in areas with weaker social norms. Our results suggest that shorttermism is not the primary driver, as the emissions-competition link is at least as strong for firms with longer-term-oriented shareholders. Our findings suggest that policies promoting competition may be at odds with climate change abatement.

Suggested Citation

  • Vesa Pursiainen & Hanwen Sun & Yue Xiang, 2025. "The Carbon Cost of Competitive Pressure," Swiss Finance Institute Research Paper Series 25-16, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2516
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5120009
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    More about this item

    Keywords

    carbon emissions; carbon intensity; competition;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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