Firm Competitiveness and the EU ETS : An empirical study using Swedish firm-level data

Abstract: This paper sets out to study the effect of the EU ETS on economic and financial indicators through which the impacts on firm competitiveness may be observed. Examining labor productivity, relative profit before tax, turnover, and value added afterthe introduction of the EU ETS offers a method for evaluating the effects of the program on economic performance. The study is based on a unique dataset of Swedish firms covering the years 2003-2008. To assess the causal impact of the EU ETS on firm performance the propensity score matching method is combined with the difference-indifference approach. The findings suggest a positive and significant impact on labor productivity, turnover and value added, while a negative and significant effect can be observed for relative profit before tax.