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The Porter Hypothesis Revisited: A Literature Review of Theoretical Models and Empirical Tests

Author

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  • Marcus Wagner

    (CSM, Univ. Lueneburg)

Abstract

The debate on the relationship between environmental regulation and competitiveness has been a topic of discussion for a number of years now. As early as 1991, the American economist Michael E. Porter proposed that stringent environmental regulation (under the condition that it is efficient) can lead to win-win situations, in which social welfare as well as the private net benefits of firms operating under such regulation can be increased. This paper analyses the Porter hypothesis with regard to two aspects. Firstly, it will analyse the theoretical reasoning behind the hypothesis by discussing and analyzing the arguments brought forward in favour of and against the hypothesis based on the discussion of different theoretical analyses and models by various authors in the field. Secondly, the paper reviews influential empirical studies trying to test the Porter hypothesis. The analysis of empirical work will allow (at least to some degree) to assess whether theoretical conclusions about the Porter hypothesis are confirmed by empirical research.

Suggested Citation

  • Marcus Wagner, 2004. "The Porter Hypothesis Revisited: A Literature Review of Theoretical Models and Empirical Tests," Public Economics 0407014, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0407014 Note: Type of Document - pdf; pages: 50
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    File URL: http://econwpa.repec.org/eps/pe/papers/0407/0407014.pdf
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    References listed on IDEAS

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    1. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009 Elsevier.
    2. Gabel H. Landis & Sinclair-Desgagne Bernard, 1993. "Managerial Incentives and Environmental Compliance," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 229-240, May.
    3. Montero, Juan-Pablo, 2002. "Permits, Standards, and Technology Innovation," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 23-44, July.
    4. Morgenstern, Richard D. & Pizer, William A. & Shih, Jhih-Shyang, 2002. "Jobs Versus the Environment: An Industry-Level Perspective," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 412-436, May.
    5. Eliste, Paavo & Fredriksson, Per G., 2002. "Environmental Regulations, Transfers, and Trade: Theory and Evidence," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 234-250, March.
    6. Rennings, Klaus & Ziegler, Andreas & Zwick, Thomas, 2001. "Employment changes in environmentally innovative firms," ZEW Discussion Papers 01-46, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Hahn, Robert W, 1989. "Economic Prescriptions for Environmental Problems: How the Patient Followed the Doctor's Orders," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 95-114, Spring.
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    Citations

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    Cited by:

    1. Leeuwen, George van & Mohnen, Pierre, 2013. "Revisiting the porter hypothesis: An empirical analysis of green innovation for the Netherlands," MERIT Working Papers 002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Everett, Tim & Ishwaran, Mallika & Ansaloni, Gian Paolo & Rubin, Alex, 2010. "Economic growth and the environment," MPRA Paper 23585, University Library of Munich, Germany.
    3. Ian H. Rowlands, 2011. "Co-impacts of energy-related climate change mitigation in Africa�s least developed countries: the evidence base and research needs," GRI Working Papers 39, Grantham Research Institute on Climate Change and the Environment.
    4. Ayhan Gormus, 2017. "Non-Unionized Workers In British Green Sectors: Evidence From The Labor Force Survey," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(1), pages 1-15.
    5. Pierre Desrochers, 2008. "Did the Invisible Hand Need a Regulatory Glove to Develop a Green Thumb? Some Historical Perspective on Market Incentives, Win-Win Innovations and the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(4), pages 519-539, December.
    6. Yang, Chih-Hai & Tseng, Yu-Hsuan & Chen, Chiang-Ping, 2012. "Environmental regulations, induced R&D, and productivity: Evidence from Taiwan's manufacturing industries," Resource and Energy Economics, Elsevier, vol. 34(4), pages 514-532.
    7. Diane-Laure Arjaliès & Jean-Pierre Ponssard, 2010. "A Managerial Perspective on the Porter Hypothesis : The Case of CO2 Emissions," Post-Print hal-00553959, HAL.
    8. David Styles & Francesco Testa & Fabio Iraldo, 2010. "Direct regulation is an efficient approach to industrial environmental improvement: empirical evidence and perceptions from chemical manufacturers in Ireland and Italy," Working Papers 201002, Scuola Superiore Sant'Anna of Pisa, Istituto di Management.
    9. Ian Rowlands, 2011. "Ancillary impacts of energy-related climate change mitigation options in Africa’s least developed countries," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 16(7), pages 749-773, October.
    10. Fabio Iraldo & Francesco Testa & Vlasis Oikonomou & Michela Melis & Marco Frey & Eise Spijker, 2009. "A literature review on the links between environmental regulation and competitiveness," Working Papers 200904, Scuola Superiore Sant'Anna of Pisa, Istituto di Management.
    11. Costantini, Valeria & Crespi, Francesco, 2008. "Environmental regulation and the export dynamics of energy technologies," Ecological Economics, Elsevier, vol. 66(2-3), pages 447-460, June.
    12. Aronsson, Thomas & Backlund, Kenneth & Sahlén, Linda, 2010. "Technology transfers and the clean development mechanism in a North-South general equilibrium model," Resource and Energy Economics, Elsevier, vol. 32(3), pages 292-309, August.
    13. Bréchet, Thierry & Jouvet, Pierre-André, 2009. "Why environmental management may yield no-regret pollution abatement options," Ecological Economics, Elsevier, vol. 68(6), pages 1770-1777, April.
    14. Böhringer, Christoph & Moslener, Ulf & Oberndorfer, Ulrich & Ziegler, Andreas, 2012. "Clean and productive? Empirical evidence from the German manufacturing industry," Research Policy, Elsevier, vol. 41(2), pages 442-451.
    15. Giulio Cainelli & Massimiliano Mazzanti & Simone Borghesi, 2012. "The European Emission Trading Scheme and environmental innovation diffusion: Empirical analyses using Italian CIS data," Working Papers 201201, University of Ferrara, Department of Economics.
    16. Giulio Cainelli & Massimiliano Mazzanti & Roberto Zoboli, 2011. "Enviromental Innovations, Complementarity and Local/Global Cooperation," Working Papers 201104, University of Ferrara, Department of Economics.
    17. Simone Borghesi & Giulio Cainelli & Massimiliano Mazzanti, 2012. "Brown Sunsets and Green Dawns in the Industrial Sector: Environmental Innovations, Firm Behavior and the European Emission Trading," Working Papers 2012.03, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    Porter Hypothesis; Empirical Testing; Theoretical Hypothesis; Environment; Economy; Innovation; Regulation;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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