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Corporate Lobbying, Regulatory Conduct and the Porter Hypothesis

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  • Catherine Liston-Heyes

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  • Anthony Heyes

Abstract

Michael Porter, the influential Harvard management guru, has promoted the idea that compliance with stricter environmental regulations can afford ‘secondary’ benefits to firms through improved product design, innovation, corporate morale and in other ways. Once these secondary benefits are factored, the net cost of compliance is argued to be lower than conventionally thought and may even be negative. Whilst environmental economists have rejected the ‘Porter Hypothesis’ as being based on excessively optimistic expectations of the likely size of such secondary benefits the underlying ideas do enjoy significant credence in the business community. In the context of a lobbying model of regulatory policy-making we argue that the EPA should change the way it conducts regulatory policy to take account of Porter's views – even if it knows those views to be misguided. The model serves to illustrate the more general point that ‘fashions’ in management thinking can be expected to impact the optimal conduct of regulatory policy. Copyright Kluwer Academic Publishers 1999

Suggested Citation

  • Catherine Liston-Heyes & Anthony Heyes, 1999. "Corporate Lobbying, Regulatory Conduct and the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(2), pages 209-218, March.
  • Handle: RePEc:kap:enreec:v:13:y:1999:i:2:p:209-218
    DOI: 10.1023/A:1008323700888
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    References listed on IDEAS

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    1. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    3. Heyes, Anthony G., 1997. "Environmental Regulation by Private Contest," Journal of Public Economics, Elsevier, vol. 63(3), pages 407-428, February.
    4. 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.
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    Cited by:

    1. Pittel, Karen & Rübbelke, Dirk T.G., 2008. "Climate policy and ancillary benefits: A survey and integration into the modelling of international negotiations on climate change," Ecological Economics, Elsevier, vol. 68(1-2), pages 210-220, December.
    2. Neil Campbell, 2003. "Does Trade Liberalization Make the Porter Hypothesis Less Relevant," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 2(2), pages 129-140, August.
    3. André, Francisco J., 2015. "Strategic Effects and the Porter Hypothesis," MPRA Paper 62237, University Library of Munich, Germany.

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