Firm's reduction of greenhouse gas emissions and economic performance: analyzing effects through demand and productivity
AbstractThis paper analyzes how a firmfs reduction of its greenhouse gas (GHG) emissions affects its economic performance. The theoretical model used is derived from the Cobb-Douglas production function and the inverse demand function, and predicts that in reducing its GHG emissions, a firm will increase its value added because it promotes an increase in demand for its output and improves its productivity. The estimation results, using data on Japanese manufacturing firms, suggest that the reduction of GHG emissions increases a firmfs economic performance only through an increase in demand. Thus, firms can improve their overall economic performance because increased demand accompanies their reduction of GHG emissions, even if they cannot achieve this through an improvement in productivity, as estimates here support the traditional view that reducing GHG emissions imposes additional costs on firms.
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Bibliographic InfoPaper provided by Hiroshima University, Graduate School for International Development and Cooperation (IDEC) in its series IDEC DP2 Series with number 1-1.
Length: 21 pages
Date of creation: Aug 2011
Date of revision:
Reduction of greenhouse gas emissions; Economic performance; Increase in demand; Improvement in productivity; Instrumental variables model;
Find related papers by JEL classification:
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- M20 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - General
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-21 (All new papers)
- NEP-EFF-2011-11-21 (Efficiency & Productivity)
- NEP-ENE-2011-11-21 (Energy Economics)
- NEP-ENV-2011-11-21 (Environmental Economics)
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