Trade liberalization and firm toxic emissions

Abstract

AbstractWe investigate the effects of trade liberalization on firm‐level toxic emissions. Using China's World Trade Organization (WTO) accession as an exogenous shock, we further introduce government administrative data of firm toxic emissions to conduct a difference‐in‐differences estimation. We show that trade liberalization significantly reduces firm toxic emissions. Our results are robust to alternative measures and different specifications. Endogeneity tests based on different empirical designs or omitted variables further validate our main findings. China's WTO accession primarily affected pollution emissions through the scale of production, export opportunities, technology upgrading, intermediate inputs, and within‐firm responses mechanisms.