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Environmental policy and profitability. Evidence from Swedish industry

Author

Listed:
  • Brännlund, Runar

    (Umeå University)

  • Lundgren, Tommy

    (Umeå School of Business)

Abstract

The purpose of this paper is to investigate the existence of a “Porter effect” using firm level data on output and inputs from Swedish industry between 1990 and 2004. By utilizing a factor demand modeling approach, and specifying a profit function which has a technology component dependent upon firm specific effective tax on CO2, we are able to separate out the effect of regulatory pressure on technological progress. The results indicate that there is evidence of a reversed “Porter effect” in most industrial sectors, specifically energy intensive industries.

Suggested Citation

  • Brännlund, Runar & Lundgren, Tommy, 2009. "Environmental policy and profitability. Evidence from Swedish industry," Sustainable Investment and Corporate Governance Working Papers 2009/2, Sustainable Investment Research Platform.
  • Handle: RePEc:hhb:sicgwp:2009_002
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    Keywords

    CO2 tax; factor demands; induced technological change; Porter argument;
    All these keywords.

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