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Revisiting the Porter Hypothesis: An Empirical Analysis of Green Innovation for the Netherlands

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  • George van Leeuwen
  • Pierre Mohnen

Abstract

Almost all empirical research that has attempted to assess the validity of the Porter hypothesis (PH) has started from reduced-form models, for example, single-equation models for estimating the contribution of environmental regulation to productivity. This paper follows a structural approach that allows testing what is known in the literature as the ‘weak’ and the ‘strong’ version of the PH. Our ‘Green Innovation’ model includes three types of eco-investments to explain differences in the incidence of two types of eco-innovation, which are allowed to affect labor productivity. We allow for complementarity between the two types of eco-innovations. Using a comprehensive panel of Dutch manufacturing firm-level data we estimate the relative importance of environmental regulations on eco-investment and eco-innovations. The results of our analysis show a strong corroboration of the weak and a nuanced corroboration of the strong version of the PH.
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Suggested Citation

  • George van Leeuwen & Pierre Mohnen, 2013. "Revisiting the Porter Hypothesis: An Empirical Analysis of Green Innovation for the Netherlands," CIRANO Working Papers 2013s-02, CIRANO.
    • Handle: RePEc:cir:cirwor:2013s-02
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    More about this item

    Keywords

    Porter Hypothesis; green innovation; environmental regulation; innovation complementarities; productivity;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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