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The strong Porter Hypothesis in an endogenous growth model with satisficing managers

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  • Dominique Bianco

    (Université de Bologne, LEDI (CNRS))

  • Evens Salies

    (OFCE-SciencesPo)

Abstract

Few endogenous growth models have focused attention on the strong Porter hypothesis, that stricter environmental policies induce innovations, the benefits ofwhich exceed the costs. A key assumption in this hypothesis is that policy strictness pushes rms to overcome some obstacles to profit maximization. We model this hypothesis by incorporating pollution and taxation in the Aghion and Grifith (2005) analysis of growth with satisficing managers. Our theoretical results predict the strong Porter hypothesis. Moreover, they suggest that the stringency of environmental policy should adjust to changes in the level of potential competition in the intermediate inputs sector

Suggested Citation

  • Dominique Bianco & Evens Salies, 2016. "The strong Porter Hypothesis in an endogenous growth model with satisficing managers," Documents de Travail de l'OFCE 2016-01, Observatoire Francais des Conjonctures Economiques (OFCE).
  • Handle: RePEc:fce:doctra:1601
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    References listed on IDEAS

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    1. 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.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
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    6. Ricci, Francesco, 2007. "Channels of transmission of environmental policy to economic growth: A survey of the theory," Ecological Economics, Elsevier, vol. 60(4), pages 688-699, February.
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    8. Ambec, Stefan & Barla, Philippe, 2007. "Survol des fondements théoriques de l’hypothèse de Porter," L'Actualité Economique, Société Canadienne de Science Economique, vol. 83(3), pages 399-413, septembre.
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    13. Hart, Rob, 2004. "Growth, environment and innovation--a model with production vintages and environmentally oriented research," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1078-1098, November.
    14. Mohr, Robert D., 2002. "Technical Change, External Economies, and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 158-168, January.
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    Cited by:

    1. Shuai Guan & Jinquan Liu & Yongfu Liu & Mingze Du, 2022. "The Nonlinear Influence of Environmental Regulation on the Transformation and Upgrading of Industrial Structure," IJERPH, MDPI, vol. 19(14), pages 1-16, July.
    2. Dominique Bianco, 2017. "Environmental Policy in an Endogenous Growth Model with Expanding Variety," Revue d'économie politique, Dalloz, vol. 127(6), pages 1013-1028.
    3. Bianco, Dominique, 2020. "Does Entrepreneurial Behaviour Matter for the Strong Porter Hypothesis," MPRA Paper 100116, University Library of Munich, Germany.

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    More about this item

    Keywords

    Strong Porter Hypothesis; Environmental Policy; Endogenous Growth;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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