The Race Among Firms for Carbon Pricing

51 Pages Posted: 8 Jul 2024

See all articles by Karishma Ansaram

Karishma Ansaram

IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management

Paolo Mazza

IESEG School of Management; LEM CNRS 9221

Mohammed Zakriya

IÉSEG School of Management; CNRS; Lille Economie Management (LEM) UMR 9221; University of Lille

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Abstract

Although carbon pricing should have a nontrivial impact on firms' environmental performance, prior studies have paid little attention to the type and number of carbon pricing mechanisms (CPMs) that firms adopt simultaneously. Thus, in this study, we analyze multiple CPMs within a single framework, including carbon trading on compliance markets, carbon tax, and internal carbon pricing. By reference to a sample of 2,303 CPM-adopting firms, we capture the relative impacts of the presence of both single and multiple CPMs on firms' environmental performance as measured in terms of Carbon Intensity, Energy Intensity, and Environmental Score. The results show that while a carbon tax can independently lead to significant improvements in environmental performance, carbon trading and internal carbon pricing are ineffective on their own and can even be detrimental in some cases. Significant heterogeneities are found with regard to the effectiveness of CPMs in carbon-intensive sectors versus other sectors and across different regions. Finally, we provide insights into how environmental innovation and board independence moderate the effects of CPMs on environmental performance.

Keywords: Carbon pricing mechanisms, Carbon markets, carbon tax, internal carbon price, Environmental Performance

Suggested Citation

Ansaram, Karishma and Mazza, Paolo and Zakriya, Mohammed, The Race Among Firms for Carbon Pricing. Available at SSRN: https://ssrn.com/abstract=4888713 or http://dx.doi.org/10.2139/ssrn.4888713

Karishma Ansaram

IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management ( email )

Paolo Mazza (Contact Author)

IESEG School of Management ( email )

3 Rue de la Digue
Office: A321
Lille, 59 59000
France

HOME PAGE: http://https://sites.google.com/site/paolomazzaphd/

LEM CNRS 9221 ( email )

Mohammed Zakriya

IÉSEG School of Management ( email )

3 rue de la Digue
Lille, 59000
France

CNRS ( email )

Lille
France

Lille Economie Management (LEM) UMR 9221 ( email )

Lille
France

University of Lille ( email )

Cité Scientifique
Villeneuve-d'Ascq, 59650
France

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