Environmental Policy Without Costs? A Review of the Porter Hypothesis

Runar Brannlund and Tommy Lundgren

International Review of Environmental and Resource Economics, 2009, vol. 3, issue 2, 75-117

Abstract: This paper reviews the theoretical and empirical literature connected to the so-called Porter hypothesis; that is, it reviews the literature connected to the relation between environmental policy and competitiveness. According to the conventional wisdom environmental policy, aiming for improving the environment through, for example emission reductions, does imply costs since scarce resources must be diverted from somewhere else. However, this conventional wisdom has been challenged and questioned recently through what has been denoted the "Porter hypothesis". Advocates of the Porter hypothesis challenge the conventional wisdom on the ground that resources are used inefficiently in the absence of the right kind of environmental regulations, and that the conventional neoclassical view is too static to take inefficiencies into account. The conclusions that can be drawn from this review are: (1) that the theoretical literature can identify the circumstances and mechanisms that must exist for a Porter effect to occur, (2) that these circumstances are rather non-general, hence rejecting the Porter hypothesis in general, and (3) that the empirical literature gives no general support for the Porter hypothesis. Furthermore, a closer look at the "Swedish case" reveals no support for the Porter hypothesis in spite of the fact that Swedish environmental policy the last 15–20 years seems to be in line the prerequisites stated by the Porter hypothesis concerning environmental policy.

Keywords: Environmental policy; The Porter hypothesis; Productivity; Profitability (search for similar items in EconPapers)
JEL-codes: D20 H23 Q52 Q55 Q56 (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (63)

Downloads: (external link)
http://dx.doi.org/10.1561/101.00000020 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:jirere:101.00000020

Access Statistics for this article

More articles in International Review of Environmental and Resource Economics from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().