Environmental policy and profitability - Evidence from Swedish industry

Runar Brännlund () and Tommy Lundgren ()
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Runar Brännlund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

No 750, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: The purpose of this paper is to investigate the existence of a “Porter effect” using firm level data on output and inputs from Swedish industry between 1990 and 2004. By utilizing a factor demand modeling approach, and specifying a profit function which has a technology component dependent upon firm specific effective tax on CO2, we are able to separate out the effect of regulatory pressure on technological progress. The results indicate that there is evidence of a reversed “Porter effect” in most industrial sectors, specifically energy intensive industries.

Keywords: CO2 tax; factor demands; induced technological change; Porter argument (search for similar items in EconPapers)
JEL-codes: D20 H23 Q52 Q55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-ene and nep-env
Date: 2008-10-10
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:umnees:0750

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