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Revisiting the porter hypothesis: An empirical analysis of green innovation for the Netherlands

George Leeuwen () and Pierre Mohnen ()

No 2013-002, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: Almost all empirical research that has attempted to assess the validity of the Porter hypothesis has started from reduced-form models, e.g. by using single-equation models for estimating the contribution of environmental regulation (ER) to productivity. This paper addresses the Porter Hypothesis within a structural approach that allows us to test what is known in the literature as the "weak" and the "strong" version of the Porter hypothesis. Our "Green Innovation" model includes three types of eco investments and non-eco R&D to explain differences in the incidence of innovation. Besides product and process innovations we recognize eco-innovation as a separate type of innovation output. We explicitly model the potential synergies of introducing the three types of innovations simultaneously and their synergy in affecting total factor productivity (TFP) performance. Using a comprehensive panel of firm-level data built from four surveys we aim to estimate the relative importance of energy price incentives as a market based type of ER and the direct effect of environmental regulation on eco investment and firms' decisions regarding the introduction of several types of innovations. The results of our analysis show a strong corroboration of the weak version of the Porter hypothesis but not of the strong version of the PH, in this case on TFP performance.

Keywords: Porter Hypothesis; green innovation; environmental regulation; innovation complementarities; productivity (search for similar items in EconPapers)
JEL-codes: H23 L5 O32 O38 Q55 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cse, nep-eff, nep-env, nep-ino and nep-knm
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Related works:
Journal Article: Revisiting the Porter hypothesis: an empirical analysis of Green innovation for the Netherlands (2017) Downloads
Working Paper: Revisiting the Porter Hypothesis: An Empirical Analysis of Green Innovation for the Netherlands (2013) Downloads
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