Environmental Regulations and Managerial Myopia
It has recently been claimed that, contrary totraditional neoclassical theory, suitably chosenenvironmental regulation is often beneficial for theregulated firms because it induces cost-reducinginnovations. I analyze the extent to which thisposition is compatible with microeconomic analysis. Itturns out that even in a framework in whichorganizational inefficiencies might lead tounderinvestment, environmental policy can onlyincrease firm profits if several very specificconditions are met. These conditions concern the typeof policy, the extent of inefficiencies, the costs ofpotential innovation projects and their effect onproductivity and abatement costs. Copyright Kluwer Academic Publishers 2001
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Volume (Year): 18 (2001)
Issue (Month): 1 (January)
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References listed on IDEAS
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- Richard J. Zeckhauser & John Pound, 1990. "Are Large Shareholders Effective Monitors? An Investigation of Share Ownership and Corporate Performance," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 149-180 National Bureau of Economic Research, Inc.
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- H. Landis Gabel & Bernard Sinclair-Desgagné, 1996.
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- Sinclair-Desgagne, Bernard & Gabel, H. Landis, 1997. "Environmental Auditing in Management Systems and Public Policy," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 331-346, July.
- Gabel H. Landis & Sinclair-Desgagne Bernard, 1993. "Managerial Incentives and Environmental Compliance," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 229-240, May.
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