Strategic Environmental Policies in the Presence of Foreign Direct Investment
We analyze strategic environmental standards in the presence of foreign direct investment. A number of foreign firms located in a host country compete with a domestic firm in another country to export a homogeneous good to a third country. When the number of foreign firms is exogenous, the host country applies a stricter environmental regulation than the other producing country. However, under free entry and exit of foreign firms, the host country may apply a less severe standard under both non-cooperative and cooperative equilibrium. We also find that the nature market structure does not affect the equilibrium values of total pollution if export subsidies are also used. Copyright Springer 2005
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Volume (Year): 30 (2005)
Issue (Month): 1 (January)
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References listed on IDEAS
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97-8, Center for Economic Studies, U.S. Census Bureau.
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- Lahiri, Sajal & Ono, Yoshiyasu, 2000. "Protecting the environment in the presence of foreign direct investment: tax versus quantity restriction," Economics Discussion Papers 9985, University of Essex, Department of Economics.
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