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Does competition prevent industrial pollution? Evidence from a panel threshold model

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  • Michael L. Polemis
  • Thanasis Stengos

Abstract

The objective of this paper is to assess the impact of competition on industrial toxic pollution by using, for the first time, a panel threshold model which allows evaluations of the main drivers of toxic releases under two different market regimes. The empirical analysis is based on a micro‐level panel dataset over the five‐year period 1987–2012. We show that this relationship is statistically significant and robust above and below the threshold, even after accounting for alternative specifications of market concentration. Specifically, we unmask an inverted V‐shaped relationship between market concentration and industrial pollution. We argue that the increasing non‐parametric regression line up to a certain concentration (threshold) level indicates a negative effect on facilities' emissions levels, whereas a decreasing line indicates a positive effect. This relationship provides new insights into environmental policy design towards abatement of industrial releases and sustainability. Finally, our empirical model remains robust under different specifications properly accounted for possible endogeneity.

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  • Michael L. Polemis & Thanasis Stengos, 2019. "Does competition prevent industrial pollution? Evidence from a panel threshold model," Business Strategy and the Environment, Wiley Blackwell, vol. 28(1), pages 98-110, January.
  • Handle: RePEc:bla:bstrat:v:28:y:2019:i:1:p:98-110
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    File URL: https://doi.org/10.1002/bse.2212
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    1. repec:spr:lsprsc:v:11:y:2018:i:1:d:10.1007_s12076-017-0195-9 is not listed on IDEAS
    2. repec:eee:ecolet:v:164:y:2018:i:c:p:1-4 is not listed on IDEAS
    3. Chen, Chaoyi & Polemis, Michael & Stengos, Thanasis, 2018. "On the Examination of Competition in the Petroleum Industry: A Pooled Panel Threshold Analysis," MPRA Paper 89671, University Library of Munich, Germany.
    4. Halkos, George & Polemis, Michael, 2018. "Does market structure trigger efficiency? Evidence for the USA before and after the financial crisis," MPRA Paper 84511, University Library of Munich, Germany.
    5. repec:eee:ejores:v:276:y:2019:i:3:p:929-946 is not listed on IDEAS
    6. repec:eee:ejores:v:276:y:2019:i:3:p:1104-1118 is not listed on IDEAS
    7. repec:rim:rimwps:24-08 is not listed on IDEAS

    More about this item

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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