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Does Entrepreneurial Behaviour Matter for the Strong Porter Hypothesis

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  • Bianco, Dominique

Abstract

The traditional economic argument states that compliance with environmental policy diverts resources from innovation. In his engaging paper, Porter (1991) argues counterintuitively that more stringent environmental policies induce innovations the benefits of which exceed the costs. We build a Schumpeterian endogenous growth model that takes account of both arguments by including satisficing and profit-maximizing managers. Our theoretical results enable us to determine the validity condition of the strong Porter hypothesis which is consistent with empirical results.

Suggested Citation

  • Bianco, Dominique, 2020. "Does Entrepreneurial Behaviour Matter for the Strong Porter Hypothesis," MPRA Paper 100116, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:100116
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    References listed on IDEAS

    as
    1. Brännlund, Runar & Lundgren, Tommy, 2009. "Environmental policy without costs? A review of the Porter hypothesis," Umeå Economic Studies 766, Umeå University, Department of Economics.
    2. 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.
    3. Feichtinger, Gustav & Hartl, Richard F. & Kort, Peter M. & Veliov, Vladimir M., 2005. "Environmental policy, the porter hypothesis and the composition of capital: Effects of learning and technological progress," Journal of Environmental Economics and Management, Elsevier, vol. 50(2), pages 434-446, September.
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    7. Lee, Jaegul & Veloso, Francisco M. & Hounshell, David A., 2011. "Linking induced technological change, and environmental regulation: Evidence from patenting in the U.S. auto industry," Research Policy, Elsevier, vol. 40(9), pages 1240-1252.
    8. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    9. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    10. Dominique Bianco & Evens Salies, 2017. "The Strong Porter Hypothesis in an Endogenous Growth Model with Satisficing Managers," Economics Bulletin, AccessEcon, vol. 37(4), pages 2641-2654.
    11. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
    12. 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.
    13. Xepapadeas, Anastasios & de Zeeuw, Aart, 1999. "Environmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 165-182, March.
    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.
    15. Francesco Ricci, 2007. "Environmental policy and growth when inputs are differentiated in pollution intensity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(3), pages 285-310, November.
    16. Gollop, Frank M & Roberts, Mark J, 1983. "Environmental Regulations and Productivity Growth: The Case of Fossil-Fueled Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 654-674, August.
    17. Aghion, Philippe & Howitt, Peter, 1996. "Research and Development in the Growth Process," Journal of Economic Growth, Springer, vol. 1(1), pages 49-73, March.
    18. Rassier, Dylan G. & Earnhart, Dietrich, 2015. "Effects of environmental regulation on actual and expected profitability," Ecological Economics, Elsevier, vol. 112(C), pages 129-140.
    19. Mark A. Cohen & Adeline Tubb, 2018. "The Impact of Environmental Regulation on Firm and Country Competitiveness: A Meta-analysis of the Porter Hypothesis," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(2), pages 371-399.
    20. Brännlund, Runar & Lundgren, Tommy, 2009. "Environmental policy without costs? A review of the Porter hypothesis," Sustainable Investment and Corporate Governance Working Papers 2009/1, Sustainable Investment Research Platform.
    21. Dominique Bianco & Evens Salies, 2017. "The Strong Porter Hypothesis in an Endogenous Growth Model with Satisficing Managers," Post-Print hal-02177939, HAL.
    22. Dominique Bianco, 2017. "Environmental Policy in an Endogenous Growth Model with Expanding Variety," Revue d'économie politique, Dalloz, vol. 127(6), pages 1013-1028.
    23. repec:hal:spmain:info:hdl:2441/vetkngao585gaehs52f2n4fkt is not listed on IDEAS
    24. Oecd, 2010. "Linkages between Environmental Policy and Competitiveness," OECD Environment Working Papers 13, OECD Publishing.
    25. Minoru Nakada, 2004. "Does Environmental Policy Necessarily Discourage Growth?," Journal of Economics, Springer, vol. 81(3), pages 249-275, March.
    26. 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.
    27. Brannlund, Runar & Lundgren, Tommy, 2009. "Environmental Policy Without Costs? A Review of the Porter Hypothesis," International Review of Environmental and Resource Economics, now publishers, vol. 3(2), pages 75-117, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Endogenous growth; Environmental Porter hypothesis; Environmental policy; Entrepreneurial Behaviours.;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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