Air pollution as comparative disadvantage

2026-01-10

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Shi-Ting He

Liugang Sheng

Peng Zhang *

DOI：10.1016/j.jpubeco.2025.105560

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• This paper examines how air pollution affects exporters’ comparative advantage. • Identification relies on thermal inversion as an exogenous source of air pollution variation. • Air pollution lowers exports by reducing labor productivity, especially for labor-intensive products. • Firms respond by reallocating product scope away from labor-intensive varieties. • A quantitative trade model shows that cleaner air strengthens China’s comparative advantage and global welfare.

Air pollution as comparative disadvantage

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