| Summary/Abstract |
The prospect of higher carbon taxation raises concerns that these policies could hinder the ability of domestic industry to compete in export markets, especially for energy-intensive sectors. The recent jump in energy prices leads to even greater worries. This paper investigates the impact of a change in energy prices on export patterns of manufacturing firms using a large panel of French firms observed from 2001 to 2015. The identification strategy uses a fixed weight energy price index as a shift-share instrumental variable for the average energy cost. For the average firm we find that a 10% increase in the energy cost is associated with a 3.6% decrease in total export value, a 1.3% decrease in the number of export destinations, and a 2.3% increase in export prices. But there are substantial heterogeneities between firms facing a similar increase in energy costs and the impact of an energy cost increase differs from one destination export to another.
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