This article analyzes the adverse competitive effect of climate policy on domestic supply using industry-level data from forty countries. In accordance with the theoretical literature, we define the competitive effect as the difference between the energy price elasticities of demand and supply; the magnitude of the competitive effect is captured by estimating the supply and demand functions. We find adverse competitive effects for certain country–industry pairs; however, these impacts are small. Additional simulation analysis shows potential for substitution between an imported product and a domestic good in less energy-intensive sectors. The results indicate the importance of considering industrial characteristics when formulating and implementing a climate policy.
prs.rt("abs_end"); Corresponding author at: Urban Research Center, Department of Civil Engineering, School of Engineering, Kyushu University, 744 Motooka, Nishi-ku, Fukuoka 819-0395, Japan. Tel.: +81 92 802 3405.Copyright © 2015 Published by Elsevier B.V.