Institutional Reforms, FDI and Pollution Tax

This study develops a theoretical model of institutional economics and corruption in order to determine the optimum institutional level that would allow the government to achieve economic equilibrium in the country, under an oligopolistic scheme of Foreign Direct Investment (FDI). In parallel, this study calculates the optimum pollution tax, from the value of which is deduced a series of strategic environmental policies that aim to maximize welfare in the FDI host country, and to involve consumers, producers, and government, as well as dishonest public sector workers.