We investigate whether a country’s comparative advantage is affected by the costs of an input to production embodied in the supply chain. Motivated by the fact that most industrial energy use takes place in the supply chain, we focus on the case of energy costs. Using a disaggregated dataset...

We investigate whether the costs of an input to production embodied in the supply chain can be a source of comparative advantage. Motivated by the fact that most industrial energy use takes place in the supply chain, we focus on the case of energy costs. Using a disaggregated dataset on trade...

In a model inspired by the EU Emissions Trading Scheme, non-cooperative countries allocate their emissions to internationally trading and non-trading sectors. Each country is better off with trading than without, and aggregate welfare is maximized with all sectors in the trading scheme. We...