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Environmental Awareness, Oligopolistic Competition, and Foreign Direct Investment

Author

Listed:
  • Rafael Salvador Espinosa Ramirez

    (University of Guadalajara, Mexico)

  • Evangelina Cruz Barba

    (University of Guadalajara, Mexico)

Abstract

In most developing countries, local companies have more expensive polluting production technology than those in developed countries. On the other hand, there is a growing concern to produce and consume ecological goods in the world. Based on this reality, and using environmental awareness as public policy, this article uses a theoretical model that determines the level of environmental awareness that a government receiving foreign investment is willing to promote, taking into account oligopolistic competition between foreign and local companies in the country. The optimal environmental awareness policy considers the impact of this policy on local investment, the benefit of the consumer, foreign investment flows, and the disutility of the contamination of polluting goods in the population. The optimal level of environmental awareness is found to depend on the degree of disutility of pollution and the introjection of politics induced by the host government.

Suggested Citation

  • Rafael Salvador Espinosa Ramirez & Evangelina Cruz Barba, 2022. "Environmental Awareness, Oligopolistic Competition, and Foreign Direct Investment," International Journal of Applied Behavioral Economics (IJABE), IGI Global, vol. 11(1), pages 1-16, January.
    • Handle: RePEc:igg:jabe00:v:11:y:2022:i:1:p:1-16
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    References listed on IDEAS

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    1. Yao Song & Zhenzhen Qin & Qi Yuan, 2019. "The Impact of Eco-Label on the Young Chinese Generation: The Mediation Role of Environmental Awareness and Product Attributes in Green Purchase," Sustainability, MDPI, vol. 11(4), pages 1-18, February.
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