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Environmental Performance and Profits

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Author Info

  • Lundgren, Tommy

    ()
    (CERE, Centre for Environmental and Resource Economics)

  • Marklund, Per-Olov

    ()
    (CERE, Centre for Environmental and Resource Economics)

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    Abstract

    In this study we investigate how firm level environmental performance (EP) affect firm level economic performance measured as profit efficiency (PE) in a stochastic profit frontier setting. Analyzing firms in Swedish manufacturing 1990-2004, results show that EP induced by environmental policy is not a determinant of PE, while voluntary or non-policy induced EP seem to have a significant (+) effect on firm PE in most sectors. The evidence generally supports the idea that good EP is also good for business, as long as EP is not brought on by policy measures, in this case a CO2 tax.

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    File URL: http://www-sekon.slu.se/~gbost/CERE_WP2012-8.pdf
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    Bibliographic Info

    Paper provided by CERE - the Center for Environmental and Resource Economics in its series CERE Working Papers with number 2012:8.

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    Length: 19 pages
    Date of creation: 17 Feb 2012
    Date of revision:
    Handle: RePEc:hhs:slucer:2012_008

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    Web page: http://www.cere.se

    Related research

    Keywords: CO2 tax; environmental performance index; profit efficiency; stochastic frontier analysis;

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    References

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    1. Färe, Rolf & Grosskopf, Shawna & Pasurka, Carl Jr., 2010. "Toxic releases: An environmental performance index for coal-fired power plants," Energy Economics, Elsevier, vol. 32(1), pages 158-165, January.
    2. Brännlund, Runar & Lundgren, Tommy, 2009. "Environmental policy without costs? A review of the Porter hypothesis," Sustainable Investment and Corporate Governance Working Papers 2009/1, Sustainable Investment Research Platform.
    3. Catherine M. Paul & Donald Siegel, 2006. "Corporate social responsibility and economic performance," Journal of Productivity Analysis, Springer, vol. 26(3), pages 207-211, December.
    4. Hamamoto, Mitsutsugu, 2006. "Environmental regulation and the productivity of Japanese manufacturing industries," Resource and Energy Economics, Elsevier, vol. 28(4), pages 299-312, November.
    5. Fare, R. & Grosskopf, S. & Hernandez-Sancho, F., 2004. "Environmental performance: an index number approach," Resource and Energy Economics, Elsevier, vol. 26(4), pages 343-352, December.
    6. Rolf Färe & Shawna Grosskopf & Carl Pasurka, 2006. "Social responsibility: U.S. power plants 1985–1998," Journal of Productivity Analysis, Springer, vol. 26(3), pages 259-267, December.
    7. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
    8. Michael Rauscher, 2006. "Voluntary Emission Reductions, Social Rewards, and Environmental Policy," CESifo Working Paper Series 1838, CESifo Group Munich.
    9. Brannlund, Runar & Lundgren, Tommy, 2009. "Environmental Policy Without Costs? A Review of the Porter Hypothesis," International Review of Environmental and Resource Economics, now publishers, vol. 3(2), pages 75-117, September.
    10. Brännlund, Runar & Lundgren, Tommy, 2009. "Environmental policy without costs? A review of the Porter hypothesis," UmeÃ¥ Economic Studies 766, Umeå University, Department of Economics.
    11. Subal C. Kumbhakar, 2001. "Estimation of Profit Functions When Profit Is Not Maximum," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 1-19.
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    Cited by:
    1. Färe, Rolf & Grosskopf, Shawna & Lundgren, Tommy & Marklund, Per-Olov & Zhou, Wenchao, 2012. "Pollution Generating Technologies and Environmental Efficiency," CERE Working Papers 2012:16, CERE - the Center for Environmental and Resource Economics.

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