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The Environmental Porter Hypothesis as a Technology Adoption Problem?

Author

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  • Kriechel, Ben
  • Ziesemer, Thomas

    (MERIT)

Abstract

The Porter Hypothesis postulates that the costs of compliance with environmental standards may be offset by adoption of innovations they trigger. We model this hypothesis using a game of timing of technology adoption. We show that times of adoption are earlier the higher the non-adoption tax. The environmental tax turns the preemption game with low profits into a game with credible precommitment yielding high profits (pro-Porter). If there is a precommitment game without environmental taxes, the introduction of a tax leads to lower profits (anti-Porter).

Suggested Citation

  • Kriechel, Ben & Ziesemer, Thomas, 2005. "The Environmental Porter Hypothesis as a Technology Adoption Problem?," Research Memorandum 008, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:umamer:2005008
    as

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    File URL: https://www.merit.unu.edu/publications/rmpdf/2005/rm2005-008.pdf
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    References listed on IDEAS

    as
    1. Hans Gersbach & Armin Schmutzler, 2003. "Endogenous spillovers and incentives to innovate," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 59-79.
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    6. Ambec, Stefan & Barla, Philippe, 2002. "A theoretical foundation of the Porter hypothesis," Economics Letters, Elsevier, vol. 75(3), pages 355-360, May.
    7. Klein, Martin & Rothfels, Jacqueline, 1999. "Can Environmental Regulation of X-Ineffecient Firms Create a -Double Dividend-?," IWH Discussion Papers 103, Halle Institute for Economic Research (IWH).
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    9. Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," Review of Economic Studies, Oxford University Press, vol. 52(3), pages 383-401.
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    11. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
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    13. Armin Schmutzler, 2001. "Environmental Regulations and Managerial Myopia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 87-100.
    14. Simpson, R. David & Bradford, Robert III, 1996. "Taxing Variable Cost: Environmental Regulation as Industrial Policy," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 282-300, May.
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    More about this item

    Keywords

    economics of technology ;

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • F1 - International Economics - - Trade
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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