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Are More Innovative Firms Less Vulnerable to New Environmental Regulation?


  • Joaquín Cañón-de-Francia


  • Concepción Garcés-Ayerbe
  • Marisa Ramírez-Alesón


Compliance with pollution limits and standards requires firms to implement adaptation processes that are not only costly themselves but also affect future profits in as much as they modify production systems and methods. This paper attempts to respond to the question of how technological knowledge moderates the effect that the implementation of a new environmental regulation has on the results of affected firms. The regulation selected for this study is the Integrated Pollution Prevention and Control Act (IPPC). A Multivariate Regression Model (MVRM) has been applied to the regulatory event. The most important implication of this paper is that technological knowledge prepares a firm for adapting to a greater environmental demand such as may be derived from a new regulation. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Joaquín Cañón-de-Francia & Concepción Garcés-Ayerbe & Marisa Ramírez-Alesón, 2007. "Are More Innovative Firms Less Vulnerable to New Environmental Regulation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(3), pages 295-311, March.
  • Handle: RePEc:kap:enreec:v:36:y:2007:i:3:p:295-311
    DOI: 10.1007/s10640-006-9023-1

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    References listed on IDEAS

    1. Arora Seema & Cason Timothy N., 1995. "An Experiment in Voluntary Environmental Regulation: Participation in EPA's 33/50 Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 271-286, May.
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    3. Battisti, Giuliana & Stoneman, Paul, 2005. "The intra-firm diffusion of new process technologies," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 1-22, February.
    4. Lamdin, Douglas J., 2001. "Implementing and interpreting event studies of regulatory changes," Journal of Economics and Business, Elsevier, vol. 53(2-3), pages 171-183.
    5. J. R. Norsworthy & Michael J. Harper & Kent Kunze, 1979. "The Slowdown in Productivity Growth: Analysis of Some Contributing factors," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(2), pages 387-422.
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    8. Robert D. Klassen & Curtis P. McLaughlin, 1996. "The Impact of Environmental Management on Firm Performance," Management Science, INFORMS, vol. 42(8), pages 1199-1214, August.
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    Cited by:

    1. Harrington, Donna Ramirez, 2012. "Two-stage adoption of different types of pollution prevention (P2) activities," Resource and Energy Economics, Elsevier, vol. 34(3), pages 349-373.
    2. Horbach, Jens & Rammer, Christian & Rennings, Klaus, 2012. "Determinants of eco-innovations by type of environmental impact — The role of regulatory push/pull, technology push and market pull," Ecological Economics, Elsevier, vol. 78(C), pages 112-122.
    3. Marzucchi, Alberto & Montresor, Sandro, 2017. "Forms of knowledge and eco-innovation modes: Evidence from Spanish manufacturing firms," Ecological Economics, Elsevier, vol. 131(C), pages 208-221.
    4. Rexhäuser, Sascha & Rammer, Christian, 2011. "Unmasking the Porter hypothesis: Environmental innovations and firm-profitability," ZEW Discussion Papers 11-036, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. repec:rom:mrpase:v:9:y:2017:i:3:p:30-44 is not listed on IDEAS
    6. Sascha Rexhäuser & Christian Rammer, 2014. "Environmental Innovations and Firm Profitability: Unmasking the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(1), pages 145-167, January.
    7. Triguero, Angela & Moreno-Mondéjar, Lourdes & Davia, María A., 2013. "Drivers of different types of eco-innovation in European SMEs," Ecological Economics, Elsevier, vol. 92(C), pages 25-33.


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