This paper investigates how commercial trucks respond to differences in environmental taxes on diesel fuel across European borders. First, we analyze truck flows at German borders using administrative toll data to understand how truck traffic reacts to changes in environmental taxes. Second, we examine individual truck journeys across Europe from their start-to-end-points using administrative survey data to assess whether trucks drive detours to avoid high environmental taxes. We find that an increase in a country’s tax rate decreases truck traffic to and from that country. However, this increase in taxes also heightens the probability of trucks taking detours to circumvent higher environmental taxes on fuel. We further investigate the environmental impacts of such tax-induced responses. We use air pollution data to determine whether local pollution increases due to tax-induced increases in cross-border truck flows. In addition, we relate the estimated excess kilometers driven to emissions to measure the environmental externalities.

This study presents preliminary evidence that the European Emission Trading Scheme (EU ETS) is exploited by multinational companies to artificially shift profits between European countries. Specifically, using the EU transaction log and Orbis ownership data, I highlight abnormally high levels of internal trade in emission allowances at year-end—despite the April surrender deadline -- within firms under the same Global Ultimate Owner (GUO). This activity is especially marked in transactions involving firms without actual emission certificate needs. Towards the year-end, allowances are moved from subsidiaries in strict accounting jurisdictions to those in lenient ones, indicating regulatory arbitrage. These patterns hint to a potential misuse of the EU ETS for financial manipulation rather than emission reduction. I hope to add further analysis, in particular related to the market price of allowances, to contribute to ensuring the EU ETS remains an effective tool for environmental objectives without facilitating unintended financial exploitation.

This paper studies the economic and environmental effects of a landmark piece of environmental legislation: the Clean Air Act. We improve the understanding of the effects of this important environmental regulation in three ways. First, we use modern event-study techniques and confidential data from the US Census Bureau to estimate the long-run impacts of the regulation on plant output, employment, and fuel use. Second, we identify two forms of spillover effects: (a) regional spillovers to unregulated areas and (b) within-firm spillovers to unregulated plants in regulated firms. We find both larger long-run effects on the economic activity of regulated plants as well as meaningful spillovers effects both within firms and across locations. Our third contribution is to combine these new results with an industry equilibrium model that captures both within-firm and cross-location spillovers of the regulation.