Abstract

SANDOVAL BRAVO, Salvador  and  ESPINOSA RAMIREZ, Rafael Salvador. Pollution quotas and differentiated environmental technology in the presence of foreign direct investment. Contad. Adm [online]. 2021, vol.66, n.2, 00014.  Epub Oct 11, 2021. ISSN 0186-1042.  https://doi.org/10.22201/fca.24488410e.2021.2645.

The objective of this document, based on a theoretical model, is to determine optimal differentiated pollution quotas established by a country receiving foreign direct investment. Foreign firms compete against national firms for a homogeneous product in an oligopolistic market. It is assumed that foreign firms are more efficient in abating pollution than national firms. It is concluded that, if the disutility produced by pollution is considerably high, the domestic country government imposes a zero pollution quota on both local and foreign companies. But in the event that the disutility is sufficiently low, the domestic government allows both firms a certain amount of emissions depending on the relative efficiency of each type of company.

Keywords : Q52; F18; F21; Pollution quotas; Environmental policies.