Although environmental regulations may imply a cost increase on firm's conventional input factors, such regulations could stimulate the incentives to improve factor productivity. Productivity measures including indicators capturing environmental improvements may also show higher or lower progress than productivity measures ignoring environmental aspects. We apply a Malmquist productivity index approach on micro data for the Norwegian pulp and paper industry, and find that the overall productivity growth accounting for changes in emissions of COD to water is higher than the growth in the productivity measure including conventional inputs only. We find the opposite result when including emissions of acids and climate gases to air. This is probably due to environmental regulations with opposing effects on different emissions. A decomposition of the Malmquist index into a technical efficiency change factor and a technical change component shows that the frontier technology has changed, while the average distance to the frontier has increased.
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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number
357.
References listed on IDEAS 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.:
Jakob Klette, Tor & Raknerud, Arvid, 2003.
"How and why do firms differ?,"
Memorandum
30/2002, Oslo University, Department of Economics.
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