IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/vcontributions.4y2005i1n6.html
   My bibliography  Save this article

Uncertain R&D and the Porter Hypothesis

Author

Listed:
  • Popp David

    (Syracuse University)

Abstract

Ever since Michael Porter proposed that environmental regulations can improve competitiveness, much economic research has examined the potential for such outcomes. Attempts to model Porter hypothesis outcomes in a way consistent with neoclassical economics have focused on things such as strategic relationships between firms, moral hazard problems, and economies of scale. In this paper, I offer a simpler alternative. The results of any R&D project are uncertain. Calibrating a simple model of induced R&D with uncertainty so that the expected value of research is only positive with environmental policy, I find that between 8 and 24 percent of simulations result in cases where post-regulation profits are higher than pre-regulation profits. This result is consistent both with Porter finding specific cases with complete innovation offsets and with macro-level findings that environmental policy is not costless. I conclude by discussing the implication of these results for environmental policy and future research.

Suggested Citation

  • Popp David, 2005. "Uncertain R&D and the Porter Hypothesis," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-16, June.
    • Handle: RePEc:bpj:bejeap:v:contributions.4:y:2005:i:1:n:6
    DOI: 10.2202/1538-0645.1423
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1538-0645.1423
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1538-0645.1423?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Maggie Cahalan & Wendy Mansfield & Natalie Justh, "undated". "The Status of Academic Libraries in the United States: Results from the 1996 Academic Library Survey with Historical Comparisons," Mathematica Policy Research Reports e75b610016454595b8935532e, Mathematica Policy Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luca Lambertini & Giuseppe Pignataro & Alessandro Tampieri, 2022. "Competition among coalitions in a cournot industry: a validation of the porter hypothesis," The Japanese Economic Review, Springer, vol. 73(4), pages 679-713, October.
    2. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
    3. André, Francisco J., 2015. "Strategic Effects and the Porter Hypothesis," MPRA Paper 62237, University Library of Munich, Germany.
    4. Spyros Arvanitis & Michael Peneder & Christian Rammer & Tobias Stucki & Martin Wörter, 2016. "Competitiveness and ecological impacts of green energy technologies: firm-level evidence for the DACH region," KOF Working papers 16-420, KOF Swiss Economic Institute, ETH Zurich.
    5. Anabel Zárate-Marco & Jaime Vallés-Giménez, 2015. "Environmental tax and productivity in a decentralized context: new findings on the Porter hypothesis," European Journal of Law and Economics, Springer, vol. 40(2), pages 313-339, October.
    6. Jung‐Ah Hwang & Yeonbae Kim, 2017. "Effects of Environmental Regulations on Trade Flow in Manufacturing Sectors: Comparison of Static and Dynamic Effects of Environmental Regulations," Business Strategy and the Environment, Wiley Blackwell, vol. 26(5), pages 688-706, July.
    7. Costantini, Valeria & Mazzanti, Massimiliano, 2012. "On the green and innovative side of trade competitiveness? The impact of environmental policies and innovation on EU exports," Research Policy, Elsevier, vol. 41(1), pages 132-153.
    8. Michael Peneder & Spyros Arvanitis & Christian Rammer & Tobias Stucki & Martin Wörter, 2022. "Policy instruments and self-reported impacts of the adoption of energy saving technologies in the DACH region," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(2), pages 369-404, May.
    9. A. Minniti & C.P. Parello & P.S. Segerstrom, 2008. "A Schumpeterian Growth Model with Heterogenous Firms," Working Papers 645, Dipartimento Scienze Economiche, Universita' di Bologna.
    10. Angela Köppl & Daniela Kletzan & Kurt Kratena & Ina Meyer, 2006. "Teilstudie 21: Umweltpolitik als Teil einer Wachstumsstrategie," WIFO Studies, WIFO, number 27460, February.
    11. Sen, Suphi, 2015. "Corporate governance, environmental regulations, and technological change," European Economic Review, Elsevier, vol. 80(C), pages 36-61.
    12. Juan Felipe Reyes-Rodríguez & Jairo González-Bueno & Gladys Rueda-Barrios, 2020. "Influence of organisational and information systems and technologies resources and capabilities on the adoption of proactive environmental practices and environmental performance," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 875-895, December.
    13. Ben Kriechel & Thomas Ziesemer, 2009. "The environmental Porter hypothesis: theory, evidence, and a model of timing of adoption," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(3), pages 267-294.
    14. Sue Wing, Ian, 2006. "Representing induced technological change in models for climate policy analysis," Energy Economics, Elsevier, vol. 28(5-6), pages 539-562, November.
    15. Andr, Francisco J. & Gonzlez, Paula & Porteiro, Nicols, 2009. "Strategic quality competition and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 182-194, March.
    16. Hiroaki Sakamoto, 2012. "Directed technical change, unilateral actions, and climate change," Discussion papers e-11-007, Graduate School of Economics Project Center, Kyoto University.
    17. Chakraborty, Pavel & Chatterjee, Chirantan, 2017. "Does environmental regulation indirectly induce upstream innovation? New evidence from India," Research Policy, Elsevier, vol. 46(5), pages 939-955.
    18. Antonio Minniti & Carmelo Parello & Paul Segerstrom, 2013. "A Schumpeterian growth model with random quality improvements," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 755-791, March.
    19. Demirel, Pelin & Kesidou, Effie, 2011. "Stimulating different types of eco-innovation in the UK: Government policies and firm motivations," Ecological Economics, Elsevier, vol. 70(8), pages 1546-1557, June.
    20. Levy, Ting & Dinopoulos, Elias, 2016. "Global environmental standards with heterogeneous polluters," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 482-498.
    21. Filiou, Despoina & Kesidou, Effie & Wu, Lichao, 2023. "Are smart cities green? The role of environmental and digital policies for Eco-innovation in China," World Development, Elsevier, vol. 165(C).
    22. Richard A. Hunt & Bret R. Fund, 2016. "Intergenerational Fairness and the Crowding Out Effects of Well-Intended Environmental Policies," Journal of Management Studies, Wiley Blackwell, vol. 53(5), pages 878-910, July.
    23. Apergis, Nicholas & Eleftheriou, Sofia & Payne, James E., 2013. "The relationship between international financial reporting standards, carbon emissions, and R&D expenditures: Evidence from European manufacturing firms," Ecological Economics, Elsevier, vol. 88(C), pages 57-66.
    24. Rexhäuser, Sascha & Rammer, Christian, 2011. "Unmasking the Porter hypothesis: Environmental innovations and firm-profitability," ZEW Discussion Papers 11-036, ZEW - Leibniz Centre for European Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bureau Jean-Christophe & Salvatici Luca, 2004. "WTO Negotiations on Market Access in Agriculture: a Comparison of Alternative Tariff Cut Proposals for the EU and the US," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-35, March.
    2. McAusland Carol, 2003. "Environmental Regulation as Export Promotion: Product Standards for Dirty Intermediate Goods," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-19, December.
    3. Anderberg Dan & Perroni Carlo, 2003. "Time-Consistent Policy and Politics: Does Voting Matter When Individuals Are Identical?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-19, March.
    4. Ferrari Dr. Alessandra, 2005. "The Payment of Hospital Services: a Waiting Lists Model," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-19, September.
    5. Borrmann Jörg, 2004. "Franchise Bidding for Postal Services in Rural Regions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-22, April.
    6. Poutvaara Panu, 2002. "Income Redistribution and Risky Occupational Choices," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-19, July.
    7. Bhole Bharat, 2006. "Commercial Development of University Research: The Role of Patents," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-31, July.
    8. Proto Eugenio, 2007. "Bank Fragility and Growth Expectations," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-32, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:contributions.4:y:2005:i:1:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.