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Environmental Regulation and Productivity: New Findings on the Porter Analysis

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  • Richard Lajeunesse
  • Paul Lanoie

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  • Michel Patry

    ()

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    Abstract

    This paper provides an empirical analysis of the relationship between the stringency of environmental regulation and total factor productivity (TFP) growth in the Quebec manufacturing sector. This allows us to investigate more fully the Porter hypothesis in three directions. First, the dynamic aspect of the hypothesis is captured through the use of lagged regulation variables. Second, we argue that the hypothesis is more relevant for more polluting sectors. Third, we argue that the hypothesis is more relevant for sectors which are more exposed to international competition. Our empirical results suggest that: 1) the contemporaneous impact of environmental regulation on productivity is negative, 2) the opposite result is observed with lagged regulation variables and 3) this effect is stronger in a sub-group of industries which are more exposed to international competition. Ce texte présente une analyse empirique de la relation entre l'ampleur de la réglementation environnementale et la productivité totale des facteurs en utilisant des données du secteur manufacturier québécois. Cet exercice nous permet de pousser l'analyse de l'hypothèse porterienne dans trois directions. Premièrement, l'introduction de variables réglementaires retardées nous permet de mieux capter l'aspect dynamique de l'hypothèse. Deuxièmement, nous postulons que l'hypothèse de Porter a plus de chance d'être valide dans les secteurs très polluants. Troisièmement, nous postulons qu'il sera de même dans les secteurs plus exposés à la concurrence extérieure. Nos résultats empiriques suggèrent que: 1) l'impact de la variable contemporaine de réglementation est négatif; 2) le résultat contraire est observé pour les variables de réglementation retardées et 3) cet effet est plus fort dans les secteurs les plus exposés à la concurrence extérieure.

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    File URL: http://www.cirano.qc.ca/pdf/publication/2001s-53.pdf
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    Bibliographic Info

    Paper provided by CIRANO in its series CIRANO Working Papers with number 2001s-53.

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    Date of creation: 01 Sep 2001
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    Handle: RePEc:cir:cirwor:2001s-53

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    Keywords: Porter hypothesis; environmental regulation; productivity; Hypothèse de Porter; réglementation environnementale; productivité;

    References

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    1. John M. Maheu & Thomas H. McCurdy, 2002. "Nonlinear Features of Realized FX Volatility," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 668-681, November.
    2. Peter Christoffersen & Eric Ghysels & Norman R. Swanson, . "Let's Get "Real" about Using Economic Data," EPRU Working Paper Series 01-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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    Cited by:
    1. Ambec, Stefan & Barla, Philippe, 2005. "Can Environmental Regulations be Good for Business? an Assessment of the Porter Hypothesis," Cahiers de recherche 0505, GREEN.

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