The Environment, Trade and Innovation with Heterogeneous Firms: A Numerical Analysis

Abstract

We employ a two-sector heterogeneous firms model in the presence of endogenous innovation and environmental constraints. We perform simple numerical simulations concerning the implication of a stringent environmental policy and trade cost differences between dirty and clean inputs. Our objective is to highlight the effects of these policy proposals on the process innovation, trade pattern, and productivity dynamics.Cap and Trade, Heterogeneous Firms, Process Innovation, Trade Pattern, Environmental Economics and Policy, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies, F18, Q55, Q56, C63,