The strong Porter hypothesis in an endogenous growth model with satisficing managers

Dominique Bianco and Evens Salies

MPRA Paper from University Library of Munich, Germany

Abstract: Few endogenous growth models have focused attention on the strong Porter hypothesis, that stricter environmental policies induce innovations, the benefits of which exceed the costs. A key assumption underlying this hypothesis is that policy strictness pushes firms to overcome some obstacles to profit maximization. This paper incorporates pollution and taxation in the Aghion and Griffith's (2005) model of growth with satisficing managers and non-drastic innovation [in Competition and growth: Reconciling Theory and Evidence, The MIT Press, Ch. 2, pp. 36-38]. Our theoretical results predict the strong Porter hypothesis. Furthermore, they suggest that environmental policy and the level of potential competition in the intermediate inputs sector are complementary. Assuming drastic innovation in the model, however, we predict the weak Porter hypothesis. Other departures from the model's initial assumptions are considered.

Keywords: Strong Porter hypothesis; Environmental policy; Endogenous growth (search for similar items in EconPapers)
JEL-codes: L16 O31 O44 (search for similar items in EconPapers)
Date: 2016-01-01, Revised 2017-03-09
New Economics Papers: this item is included in nep-env, nep-gro and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The Strong Porter Hypothesis in an Endogenous Growth Model with Satisficing Managers (2017)
Working Paper: The strong porter hypothesis in an endogenous growth model with satisficing managers (2017)
Working Paper: The strong porter hypothesis in an endogenous growth model with satisficing managers (2017)
Working Paper: The strong Porter Hypothesis in an endogenous growth model with satisficing managers (2016)
Working Paper: The Strong Porter Hypothesis in an Endogenous Growth Model with Satisficing Managers (2016)
Working Paper: The Strong Porter Hypothesis in an Endogenous Growth Model with Satisficing Managers (2016)
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