Privatization in a polluting industry in the presence of foreign competition

Bouwe Dijkstra, Anuj Mathew and Arijiy Mukherjee

No 08/2012, NCID Working Papers from Navarra Center for International Development, University of Navarra

Abstract: Recent evidence shows that developing countries and transition economies are increasing privatizing their public firms at the same time experiencing rapid growth of inward foreign direct investment (FDI). In an international mixed oligopoly, we analyze the interaction between privatization and FDI in the context of environmental pollution and regulation. We find that the FDI incentive generally increases with privatization. Under export, welfare increases with privatization calling for complete privatization. However, under FDI due to the increasing pollution effect resulting from the relocation, the optimal degree of privatization is partial. If the degree of privatization that is required to attract FDI is very high, such that the welfare under FDI is lower than the welfare under export, the host country will deter FDI through lower degree of privatization.

Keywords: Emission taxation; Foreign Direct Investment; Trade; Privatization (search for similar items in EconPapers)
JEL-codes: F12 F18 F21 L33 Q50 Q58 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2012-12
References: Add references at CitEc
Citations:

Downloads: (external link)
http://ncid.unav.edu/download/file/fid/859 (application/pdf)
http://link.springer.com/article/10.1007/s00712-014-0407-3 Link to published text

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nva:unnvaa:wp08-2012

Access Statistics for this paper

More papers in NCID Working Papers from Navarra Center for International Development, University of Navarra
Bibliographic data for series maintained by ().