The environmental Porter hypothesis: theory, evidence, and a model of timing of adoptionBen Kriechel () and Thomas Ziesemer () Economics of Innovation and New Technology, 2009, vol. 18, issue 3, pages 267-294 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 will show that times of adoption will be earlier if the non-adoption tax is higher. The environmental tax will turn the preemption game with low profits into a game with credible precommitment generating higher profits (pro-Porter). If there is a precommitment game without environmental taxes, the introduction of a tax will lead to lower profits (anti-Porter). An evaluation of the empirical literature indicates that the Porter hypothesis will hold even for profit-maximizing firms under multiple market imperfections such as imperfect competition, X-inefficiency, and agency costs. These are more likely to be present in sectors with large firms. In many case studies that we have evaluated, though, we detected an element of explicit or implicit subsidies for environmentally friendly behaviour, which is in line with Pigovian policies. Keywords: environmental policy; strategic trade theory; technology adoption; Porter hypothesis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:taf:ecinnt:v:18:y:2009:i:3:p:267-294 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Economics of Innovation and New Technology from Taylor and Francis Journals |
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