Foreign Direct Investment and the Optimal Environmental Tax of the Host Country

Project Details


The purpose of this project is to analyze the optimal environmental tax of a host country when facing a multinational firm who may potentially invest in the host country. Due to the non-discriminatory and non-negative properties of the environmental tax, it is difficult for the host government to decide the optimal environmental tax level. In this project, the objective of the environmental tax is not only to correct the pollution externality but also serve as an instrument to attract or deter foreign direct investment. In addition, how do the host market structure, green corporate social responsibility, and pollution abatement affect host government’s optimal environmental tax will also be studied. Finally, other possible environmental policy instrument will be taken into account.
Effective start/end date1/08/2031/12/21

UN Sustainable Development Goals

In 2015, UN member states agreed to 17 global Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all. This project contributes towards the following SDG(s):

  • SDG 11 - Sustainable Cities and Communities


  • foreign direct investment
  • environmental tax
  • green corporate social responsibility
  • pollution abatement


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