Elgar original reference
Edited by Janet E. Milne and Mikael S. Andersen
In recent years, as trade and globalization have become perceived as increasingly important sources of economic growth and development (Mongelli et al. 2006, 88), concern with regard to the implications of more stringent environmental policies within the EU on the competitive situation of European industry as compared to their main foreign competitors has intensified, in particular in the context of the EU energy and climate policy plans. This chapter is intended to explore this concern. The chapter focuses on the European context because European experiences with energy and carbon taxes have provided the opportunity to analyze competitiveness impacts of environmental tax policies. Nevertheless, the competitiveness principles and methodology discussed here can apply to other parts of the world as well and therefore are of broader interest. While on first consideration the concept of competitiveness seems straightforward, in fact its meaning varies with the level at which it is being considered. Most simply, for the firm it relates to whether the firm’s products can be sold in competitive markets. Thus OECD (2003, 5) defined competitiveness at the business/firm level as ‘primarily a matter of being able to produce products that are either cheaper or better than those of other firms.’ The markets in question in an economy open to international trade may be domestic or foreign.
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