The Strong Porter Hypothesis in an Endogenous Growth Model with Satisficing Managers

Dominique Bianco and Evens Salies

Economics Bulletin, 2017, vol. 37, issue 4, 2641-2654

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 model of Aghion and Griffith (2005) of growth which includes satisficing managers and non-drastic innovation. Our theoretical results predict the strong Porter hypothesis. However, assuming drastic innovation in the model, we predict the weak Porter hypothesis. We also consider several extensions, such as a simultaneous competition policy or a command and control policy.

Keywords: Porter hypothesis; Environmental policy; Endogenous growth (search for similar items in EconPapers)
JEL-codes: O4 Q5 (search for similar items in EconPapers)
Date: 2017-11-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
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 (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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