Does Trade Liberalization Make the Porter Hypothesis Less Relevant
AbstractThe Porter Hypothesis refers to the idea that environmental regulations push firms into developing and adopting new technologies. Controversially, it asserts that the investments in new technology that the firms are pushed into making would be profitable irrespective of whether the regulations had have been put in place. In this paper a simple model is used to illustrate a Porter Hypothesis situation. This framework allows us to establish what conditions are required for a tariff reduction to be an alternative to environmental regulations. That is, we look at a case where, under tariff protection, the firm will only invest in new technology when the environmental regulation is put in place, but in the absence of tariffs, the firm will invest in new technology irrespective of whether the environmental regulation is in place.
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Bibliographic InfoArticle provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.
Volume (Year): 2 (2003)
Issue (Month): 2 (August)
environmental regulation; innovation offsets; managerial incentives; Porter Hypothesis; trade liberalization;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
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- Campbell, Neil, 1998. "Can We Believe in Cold Showers?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 13, pages 131-162.
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