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Local content and emission taxes when the number of foreign firms is endogenous

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  • Luis Gautier

    (University of Texas at Tyler)

Abstract

There is a wide range of countries which have employed local content requirements to promote jobs and meet national green energy objectives. At the same time market-based policies (e.g., emission taxes) have been implemented to address environmental degradation. This paper considers a Cournot model in the presence of emission taxes and local content requirements where the number of foreign, more efficient firms, is endogenous. The analysis explores conditions under which an emission tax and/or local content may lower emissions and encourage foreign direct investment. The analysis of policy reform is also explored.

Suggested Citation

  • Luis Gautier, 2017. "Local content and emission taxes when the number of foreign firms is endogenous," Journal of Economics, Springer, vol. 122(3), pages 239-266, November.
    • Handle: RePEc:kap:jeczfn:v:122:y:2017:i:3:d:10.1007_s00712-017-0541-9
    DOI: 10.1007/s00712-017-0541-9
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Local content; Emission taxes; FDI; Policy reform; Free entry;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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