Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/153355 
Year of Publication: 
2008
Series/Report no.: 
ECB Working Paper No. 921
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
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.
Subjects: 
environmental taxes
Foreign Direct Investment
multinational enterprises
plant location
JEL: 
F12
F18
F23
Document Type: 
Working Paper

Files in This Item:
File
Size
819.65 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.