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This article uses firm × national market export and import data for all Swedish private sector firms for 1997–2014 to examine the firm‐level contribution of trade and foreign ownership to the correlation between Swedish value added growth and partner country gross domestic product (GDP) growth. Export and import links increase the firm‐level correlation but net out for firms that both export to and import from the same market, evidence that this type of 'natural hedging' can help reduce a firm's exposure to foreign economic shocks. We proceed to aggregate the firm‐level results to the whole economy and find that severing firm‐level ties with a foreign market is predicted to lower the correlation between Swedish value added growth and foreign GDP growth from 0.72 to 0.64 on average. Gabaix's 'granularity' of trade is central to this result: if all firms are given equal weight overall correlations are essentially unaffected by severing firm level ties. Natural hedging is quantitatively important at the firm level and also plays a role in limiting overall comovements. [ABSTRACT FROM AUTHOR]

China launched the first Operation Green Fence (OGF) on 1 February 2013 to fend off inflows of illegal waste. The main objective of OGF was to enforce waste trade policies already adopted by China and thereby restrict illegal waste imports. We use a gravity model of international trade with annual bilateral waste trade data at the 6‐digit HS code level to assess the impact of OGF on the international waste trade. First, we study the direct impact of OGF and find that the intervention resulted in a 26% drop in low‐quality waste exports to China from developed countries. Second, we assess the impact of OGF on exports from developed countries to developing countries, excluding China. We do not find a statistically significant effect of OGF on low‐quality waste exports from developed countries to developing countries (excluding China). We also test the waste haven hypothesis and do not find evidence that waste exports were disproportionately diverted to countries with lax environmental regulation. [ABSTRACT FROM AUTHOR]

This paper uses matched employer–employee data covering the universe of Swedish private sector firms 1998–2014 to examine the links between exchange rate risk and the skill composition of labor in firms. We use firm × export destination and firm × import origin data to calculate firm-level measures of real exchange rate risk and real effective exchange rates. Our main result is that firms facing higher exchange rate risk employ a higher share of skilled labor and that the effect is especially marked among trade intensive firms in manufacturing and in firms with fewer than 50 employees. This finding is consistent with theoretical models of flexible work systems that require higher skill levels as a way of responding to higher risk. [ABSTRACT FROM AUTHOR]

A number of researchers have found that imports by pollution heavy industries do not increase in response to tighter pollution policy. We empirically evaluate the impact of an sudden and unexpected increase in Swedish electricity prices in the 2000s on the imports of intermediate inputs by Swedish manufacturers. We find that imports declined as domestic electricity prices rose for firms with the most electricity-intense in-house production. We rationalize these findings by developing a simple model of trade in intermediate inputs, which illustrates that energy-intense firms may decrease imports if it is sufficiently difficult to substitute between domestic- and foreign-sourced inputs as domestic energy prices rise. The offshoring mechanism which we identify can help to reconcile conflicting empirical results in the carbon leakage and pollution haven literature, and also has implications for determining the extent to which energy intense trade-exposed sectors should be exempt from domestic climate change policy. [ABSTRACT FROM AUTHOR]

Abstract: It is suggested that trade measures should be used to induce exporters to adopt more ambitious climate policy and reduce global emissions. However, a tariff and the exporter's emission tax are likely substitutes, which would undermine the rationale for these trade measures. This paper examines incentives to regulate the climate under border carbon adjustment (BCA), defined as an import duty of a magnitude determined by the difference in emission taxes between trade partners. Unlike a tariff, a BCA can induce the exporter to adopt a higher tax, suggesting that the BCA and tariff are not equally effective at targeting global emission levels and that the features of the border measure matter in assessing the effectiveness of trade policy in targeting global emissions. [ABSTRACT FROM AUTHOR]

Market shares for organic products remain modest despite broad professed consumer interest in purchasing organic products. We use counterfactual product introductions in an estimated demand model to systematically explore the links between product assortment and the market share for organic products. The demand estimates on which we base the counterfactuals use 3 years of household panel data on retail coffee purchases in Sweden, combining household’s stated and revealed behavior in a discrete choice model. The predicted market shares of new organic products are highly dependent on which brand that the organic label partners with. Introduction of a new organic product is predicted to increase in-sample organic market share from around 5% up to a maximum of around 8%. The market expansion effect dominates the market stealing effect for almost all entrants. The largest market share gains for organic products are not to be had amongst the keenest organic households, but rather amongst the moderately keen organic households. [ABSTRACT FROM AUTHOR]

This paper uses a monopolistic competitive framework to study the impact of trade liberalization on local and global emissions. We focus on the interplay of asymmetric emission taxes and the home market effect and show how a large-market advantage can counterbalance a high emission tax, so that trade liberalization leads firms to move to the large high-tax economy. Global emissions decrease when trade is liberalized in this case. We then simulate the model with endogenous taxes. The larger country, which has the advantage of the home market effect, will be able to set a higher Nash emission tax than its smaller trade partner yet still maintain its manufacturing base. As a result, a pollution haven will typically not arise in this case as trade is liberalized. However, global emissions increase as a result of international tax competition, which underscores the importance of international cooperation as trade becomes freer. [ABSTRACT FROM AUTHOR]

We use monthly sales of all wines, beer, and spirits sold between 2006 and 2011 by Sweden's retail monopoly on alcohol to estimate the causal effect of retail distribution on market share by volume at the product level. Products are defined at the level of the stock-keeping unit. Two institutional features are key to identifying the causal effect: First, the monopolist uses four levels of retail distribution; a change in retail distribution is therefore associated with a discrete shift in the number of stores that carry a product in a given month. Second, the retailer is legally bound and monitored by the European Union to ensure that it acts in a non-discriminatory manner with all its suppliers. These features allow us to rule out many possible confounding factors in estimating the effect of distribution on sales volume. We find large and statistically significant effects from changes in retail distribution on market share by volume across all levels of retail distribution. The associated volume elasticity of retail distribution is convex; the wider the retail distribution the greater the marginal volume increase from further widening. In this market, wider distribution means reaching stores with successively smaller assortment. Our results indicate that the smaller assortment in smaller stores, coupled with a low resistance to compromise, is the main reason for the convex pattern. In other words, convexity appears to be generated by products achieving 'a larger share of a smaller pie' as retail distribution expands. Data are available at . [ABSTRACT FROM AUTHOR]

This paper investigates the role of governance dimensions in socio-economic transitions in line with degrowth, i.e., an equitable downscaling of the economy. Our focus is on experiences from the 2008 economic crisis in Latvia and Iceland. Although these cases are not in themselves examples of degrowth, we see them as important sources of empirical learning from major socio-economical transitions; furthermore, we see crises as possible starting points for future degrowth transitions. This paper applies a governance framework to explore the vast differences in management strategies and crisis outcomes in Latvia and Iceland. In Iceland, public resistance led to a shift in policy measures such that economic inequality and the negative social consequences of the crisis decreased. In Latvia, public resistance existed but had no strong influence. The outcome in Latvia included none of the elements of equitable downscaling found in the case of Iceland. These two cases show how differences in formal institutional arrangements, political culture and societal trust affect different governance dimensions during a time of crisis. The analysis illustrates the importance of institutional and governance dimensions in major socio-economical transitions, and demonstrates how they influence the kind of transition that can be realized. [ABSTRACT FROM AUTHOR]