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Environmental policy and profitability - Evidence from Swedish industry

Author

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  • Brännlund, Runar

    () (Department of Economics, Umeå University)

  • Lundgren, Tommy

    () (Department of Forest Economics, Swedish University of Agricultural Sciences)

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, 2008. "Environmental policy and profitability - Evidence from Swedish industry," Umeå Economic Studies 750, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0750
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Thierry Bréchet & Sylvette Ly, 2013. "The many traps of green technology promotion," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 73-91, January.
    2. Stöver, Jana & Weche, John P., 2015. "Environmental regulation and sustainable competitiveness: Evaluating the role of firm-level green investments in the context of the Porter hypothesis," HWWI Research Papers 170, Hamburg Institute of International Economics (HWWI).
    3. Lundgren, Tommy & Marklund, Per-Olov & Samakovlis, Eva & Zhou, Wenchao, 2013. "Carbon Prices and Incentives for Technological Development," CERE Working Papers 2013:4, CERE - the Center for Environmental and Resource Economics.
    4. repec:gam:jsusta:v:10:y:2018:i:3:p:641-:d:133963 is not listed on IDEAS
    5. Doran, Justin & Ryan, Geraldine, 2012. "Regulation and Firm Perception, Eco-Innovation and Firm Performance," MPRA Paper 44578, University Library of Munich, Germany.
    6. Jaraite, Jurate & Kažukauskas, Andrius & Lundgren, Tommy, 2012. "Determinants of Environmental Expenditure and Investment: Evidence from Sweden," CERE Working Papers 2012:7, CERE - the Center for Environmental and Resource Economics.
    7. Sebastián J. Miller & Mauricio A. Vela, 2013. "Are Environmentally Related Taxes Effective?," IDB Publications (Working Papers) 4685, Inter-American Development Bank.
    8. repec:spr:empeco:v:54:y:2018:i:1:d:10.1007_s00181-016-1180-7 is not listed on IDEAS
    9. Thomas Broberg & Per-Olov Marklund & Eva Samakovlis & Henrik Hammar, 2013. "Testing the Porter hypothesis: the effects of environmental investments on efficiency in Swedish industry," Journal of Productivity Analysis, Springer, vol. 40(1), pages 43-56, August.
    10. Bostian, Moriah & Färe, Rolf & Grosskopf, Shawna & Lundgren, Tommy & Weber, William L., 2016. "Time substitution for environmental performance: The case of Sweden manufacturing," CERE Working Papers 2016:3, CERE - the Center for Environmental and Resource Economics.
    11. repec:gam:jsusta:v:9:y:2017:i:12:p:2323-:d:122721 is not listed on IDEAS
    12. Nikos Chatzistamoulou & George Diagourtas & Kostas Kounetas, 2017. "Do pollution abatement expenditures lead to higher productivity growth? Evidence from Greek manufacturing industries," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 15-34, January.
    13. Tommy Lundgren & Per-Olov Marklund, 2015. "Climate policy, environmental performance, and profits," Journal of Productivity Analysis, Springer, vol. 44(3), pages 225-235, December.
    14. repec:spr:envpol:v:20:y:2018:i:1:d:10.1007_s10018-017-0182-9 is not listed on IDEAS
    15. Frank Goetzke & Tilmann Rave & Ursula Triebswetter, 2012. "Diffusion of environmental technologies: a patent citation analysis of glass melting and glass burners," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(2), pages 189-217, April.
    16. Brännlund, Runar & Lundgren, Tommy & Marklund, Per-Olov, 2011. "Environmental performance and climate policy," Sustainable Investment and Corporate Governance Working Papers 2011/1, Sustainable Investment Research Platform.

    More about this item

    Keywords

    CO2 tax; factor demands; induced technological change; Porter argument;

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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