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Environmental Regulation and Productivity: New Findings on the Porter Hypothesis

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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.

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    File URL: http://www.hec.ca/iea/cahiers/2001/iea0105_pl.pdf
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    Bibliographic Info

    Paper provided by HEC Montréal, Institut d'économie appliquée in its series Cahiers de recherche with number 01-05.

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    Length: 16 pages
    Date of creation: Sep 2001
    Date of revision:
    Handle: RePEc:iea:carech:0105

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    Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
    Phone: (514) 340-6463
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    Web page: http://www.hec.ca/iea/
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    Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
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    Related research

    Keywords: Porter hypothesis; environmental regulation; productivity.;

    This paper has been announced in the following NEP Reports:

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 1998. "Is Free Trade Good for the Environment?," NBER Working Papers 6707, National Bureau of Economic Research, Inc.
    2. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    3. Karen Palmer & Wallace E. Oates & Paul R. Portney, 1995. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 119-132, Fall.
    4. Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 77(5), pages 998-1006, December.
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    Cited by:
    1. Fabio Iraldo & Francesco Testa & Vlasis Oikonomou & Michela Melis & Marco Frey & Eise Spijker, 2009. "A literature review on the links between environmental regulation and competitiveness," Working Papers 200904, Scuola Superiore Sant'Anna of Pisa, Istituto di Management.

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