Pollution Haven with Technological Externalities Arising from Foreign Direct Investment

Title
Pollution Haven with Technological Externalities Arising from Foreign Direct Investment
Author(s)
강기천이기동[이기동]이우형[이우형]
Keywords
ENVIRONMENTAL-REGULATIONS; MULTINATIONAL FIRMS; ABATEMENT COSTS; PLANT LOCATIONS; US STATES; TRADE; INTRAINDUSTRY; COMPETITION; HYPOTHESIS; POLICIES
Issue Date
201401
Publisher
SPRINGER
Citation
ENVIRONMENTAL & RESOURCE ECONOMICS, v.57, no.1, pp.1 - 18
Abstract
This paper presents a two-stage game, in which in the first stage two multinational firms (MNFs) seeking pollution havens choose a location, that is, whether to export to or undertake FDI in the host country, and in the second stage, these two MNFs and a firm in the host country play a Cournot game. The MNFs' location decisions are influenced by the fixed cost of FDI, the spillover of technologies to a foreign firm, and pollution emission standards in the host and home countries. There exist multiple equilibria in the location pattern because of the technology spillover accompanied by FDI. In addition, the analysis leads to the possibility of an equilibrium based on the Prisoners' Dilemma. When the host country relaxes emission standards, the MNFs choose FDI, although their profits are higher if both choose to export instead. This provides a rationale for the FDI source country's intervention to restrict the MNFs' FDI according to the level of environmental regulation in the host country.
URI
http://hdl.handle.net/YU.REPOSITORY/33533http://dx.doi.org/10.1007/s10640-013-9655-x
ISSN
0924-6460
Appears in Collections:
상경대학 > 경제금융학부 > Articles
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