Post by Sapphire Capital on Sept 27, 2008 0:04:26 GMT 4
Foreign Direct Investment and Environmental Taxes
Roberto A. De Santis
European Central Bank (ECB) - Directorate General Economics
Frank Stähler
University of Otago - Department of Economics
July 31, 2008
ECB Working Paper No. 921
Abstract:
This paper studies the effect of foreign direct investment (FDI) on environmental policy stringency in a two-country model with trade costs, where FDI could be unilateral and bilateral and both governments address local pollution through environmental taxes. We show that FDI does not give rise to ecological dumping because the host country has an incentive to shift rents away from the source country towards the host country. Environmental policy strategies and welfare effects are studied under the assumption that parameter values support FDI to be profitable.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1157777_code485639.pdf?abstractid=1157777&mirid=3
Roberto A. De Santis
European Central Bank (ECB) - Directorate General Economics
Frank Stähler
University of Otago - Department of Economics
July 31, 2008
ECB Working Paper No. 921
Abstract:
This paper studies the effect of foreign direct investment (FDI) on environmental policy stringency in a two-country model with trade costs, where FDI could be unilateral and bilateral and both governments address local pollution through environmental taxes. We show that FDI does not give rise to ecological dumping because the host country has an incentive to shift rents away from the source country towards the host country. Environmental policy strategies and welfare effects are studied under the assumption that parameter values support FDI to be profitable.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1157777_code485639.pdf?abstractid=1157777&mirid=3