Do Stringent Environmental Policies Deter FDI? M&A versus Greenfield

Arbeitspapier

This study examines how environmental stringency affects the location decision of foreigndirect investments. We analyze a firm-level data set on German outbound FDI and innovate onprevious studies by controlling for the mode of entry and applying the mixed-logit analysis. Theresults show that Greenfield projects react to environmental regulation in a strongly differentway than M&As. We find robust support for pollution haven hypothesis for pollutingGreenfields. M&A investments in low polluting industries, on the other hand, seem to beattracted by stricter environmental regulation. We introduce a new instrumental variable forenvironmental stringency and apply it to verify the results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5262

Classification and Topics

• Classification: Wirtschaft ; Economic Impacts of Globalization: Environment ; Environmental Economics: General ; Environmental Economics: Government Policy
• Subject: FDI ; environmental stringency ; mixed logit ; entry mode ; PHH

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bialek, Sylwia ; Weichenrieder, Alfons
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/108809
• Last update: 10.03.2025, 11:44 AM CET