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The Impact of Pollution Charges on Productivity Growth in Canadian Brewing

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  • J.B. Smith
  • W A. Sims

Abstract

This article presents an econometric analysis of the productivity impact of pollution charges on firms in the Canadian brewing industry. We estimate a translog cost function that allows for differences between regulated and unregulated plants. Productivity is measured by the standard residual method. The empirical work, which is based on plant level data from a single industry, suggests that pollution charges have a negative impact on productivity growth. This, however, is not necessarily undesirable, since accompanying these costs are definite benefits in terms of a cleaner environment.

Suggested Citation

  • J.B. Smith & W A. Sims, 1985. "The Impact of Pollution Charges on Productivity Growth in Canadian Brewing," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 410-423, Autumn.
  • Handle: RePEc:rje:randje:v:16:y:1985:i:autumn:p:410-423
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    1. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
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    5. ten Raa, Thijs, 1983. "Supportability and anonymous equity," Journal of Economic Theory, Elsevier, vol. 31(1), pages 176-181, October.
    6. John C. Panzar & Robert D. Willig, 1977. "Free Entry and the Sustainability of Natural Monopoly," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 1-22, Spring.
    7. William W. Sharkey, 1981. "Existence of Sustainable Prices for Natural Monopoly Outputs," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 144-154, Spring.
    8. Faulhaber, Gerald R & Levinson, Stephen B, 1981. "Subsidy-Free Prices and Anonymous Equity [Cross-Subsidization: Pricing in Public Enterprises]," American Economic Review, American Economic Association, vol. 71(5), pages 1083-1091, December.
    9. Baumol, William J & Bailey, Elizabeth E & Willig, Robert D, 1977. "Weak Invisible Hand Theorems on the Sustainability of Multiproduct Natural Monopoly," American Economic Review, American Economic Association, vol. 67(3), pages 350-365, June.
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    Cited by:

    1. Chih-Wei Peng & Mei-Ling Yang, 2014. "The Effect of Corporate Social Performance on Financial Performance: The Moderating Effect of Ownership Concentration," Journal of Business Ethics, Springer, vol. 123(1), pages 171-182, August.
    2. Stefan Ambec & Paul Lanoie, 2007. "When and Why Does It Pay To Be Green?," CIRANO Working Papers 2007s-20, CIRANO.
    3. Lanoie, Paul & Laplante, Benoît & Tanguay, Georges A., 1994. "La firme et l’environnement," L'Actualité Economique, Société Canadienne de Science Economique, vol. 70(2), pages 97-111, juin.
    4. Ambec, Stefan & Barla, Philippe, 2005. "Can Environmental Regulations be Good for Business? an Assessment of the Porter Hypothesis," Cahiers de recherche 0505, Université Laval - Département d'économique.
    5. Charles Dufour & Paul Lanoie & Michel Patry, 1995. "Regulation and Productivity in the Quebec Manufacturing Sector," CIRANO Working Papers 95s-12, CIRANO.
    6. Ambec, Stefan & Barla, Philippe, 2001. "Productivité et réglementation environnementale: une analyse de l'hypothèse de Porter," Cahiers de recherche 0107, Université Laval - Département d'économique.
    7. Albrizio, Silvia & Kozluk, Tomasz & Zipperer, Vera, 2017. "Environmental policies and productivity growth: Evidence across industries and firms," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 209-226.
    8. 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.
    9. 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.
    10. Wang, Hua, 2002. "Pollution regulation and abatement efforts: evidence from China," Ecological Economics, Elsevier, vol. 41(1), pages 85-94, April.
    11. Kennedy, Peter, 1994. "Innovation stochastique et coût de la réglementation environnementale," L'Actualité Economique, Société Canadienne de Science Economique, vol. 70(2), pages 199-209, juin.
    12. Runar Brännlund & Tommy Lundgren, 2010. "Environmental policy and profitability: evidence from Swedish industry," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 12(1), pages 59-78, June.
    13. Fabio Iraldo & Francesco Testa & Vlasis Oikonomou & Michela Melis & Marco Frey & Eise Spijker, 2009. "A literature review on the links between environmental regulation and competitiveness," Working Papers 200904, Scuola Superiore Sant'Anna of Pisa, Istituto di Management.
    14. Yin Xia & Steven Buccola, 2002. "Size, cost, and productivity in the meat processing industries," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 283-299.
    15. Wang,Hua*Ming Chen, 1999. "How the Chinese system of charges and subsidies affects pollution control efforts by China's top industrial polluters," Policy Research Working Paper Series 2198, The World Bank.
    16. repec:gam:jsusta:v:9:y:2017:i:12:p:2323-:d:122721 is not listed on IDEAS
    17. Brännlund, Runar & Lundgren, Tommy, 2008. "Environmental policy and profitability - Evidence from Swedish industry," Umeå Economic Studies 750, Umeå University, Department of Economics.
    18. Chien, Chin-Chen & Peng, Chih-Wei, 2012. "Does going green pay off in the long run?," Journal of Business Research, Elsevier, vol. 65(11), pages 1636-1642.
    19. Vanessa Magness, 2006. "Strategic posture, financial performance and environmental disclosure: An empirical test of legitimacy theory," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 19(4), pages 540-563, July.
    20. Fleishman, Rachel & Alexander, Rob & Bretschneider, Stuart & Popp, David, 2009. "Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants," Energy Policy, Elsevier, vol. 37(11), pages 4574-4582, November.
    21. Brännlund, Runar, 2008. "Productivity and environmental regulations - A long run analysis of the Swedish industry," Umeå Economic Studies 728, Umeå University, Department of Economics.

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