The Environmental Porter Hypothesis as a Technology Adoption Problem?
AbstractThe Porter Hypothesis postulates that the costs of compliance with environmental standards may be partially or even fully offset by adoption of innovations they trigger. The timing of the adoption aspect of the Porter Hypothesis has not been captured in formal theory so far. We show in this paper how the Porter Hypothesis can be approached using a model of technology adoption. In the Reinganum-Fudenberg-Tirole game of timing, a firm adopts earlier under stricter environmental taxation, and under some circumstances can credibly precommit to early adoption. We show that all times of adoption - preemption, following and joint late adoption - are earlier the higher the non-adoption tax. Under preemption the firm of the country that varies environmental taxes will adopt first with certainty indicating increased competitiveness, but get lower profits than without environ- mental policy. Thus the Porter Hypothesis of increasing overall profits is rejected.
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Bibliographic InfoPaper provided by Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT) in its series Research Memorandum with number 011.
Date of creation: 2003
Date of revision:
economics of technology ;
Other versions of this item:
- Kriechel,Ben & Ziesemer,Thomas, 2005. "The Environmental Porter Hypothesis as a Technology Adoption Problem?," Research Memorandum 008, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
- F1 - International Economics - - Trade
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
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