Environmental policy without costs? : A review of the Porter hypothesis

By R. Brännlund, T. Lundgren. 2009

151 citations recorded by the source corpus.

This paper reviews the theoretical and empirical literature connected to the so called Porter Hypothesis. That is, to review the literature connected to the discussion about the relation between environmental policy and competitiveness. According to the conventional wisdom environmental policy, aiming for improving the environment through for example emission reductions, do imply costs since scarce resources must be diverted from somewhere else. However, this conventional wisdom has been challenged and questioned recently through what has been denoted the “Porter hypothesis”. Those in the forefront of the Porter hypothesis challenge the conventional wisdom basically on the ground that resources are used inefficiently in the absence of the right kind of environmental regulations, and that the conventional neo-classical view is too static to take inefficiencies into account. The conclusions that can be made from this review is (1) that the theoretical literature can identify the circumstances and mechanisms that must exist for a Porter effect to occur, (2) that these circumstances are rather non-general, hence rejecting the Porter hypothesis in general, (3) that the empirical literature give no general support for the Porter hypothesis. Furthermore, a closer look at the “Swedish case” reveals no support for the Porter hypothesis in spite of the fact that Swedish environmental policy the last 15-20 years seems to be in line the prerequisites stated by the Porter hypothesis concerning environmental policy.

Subfields: Economics and Econometrics, Management, Monitoring, Policy and Law

View Paper: https://www.semanticscholar.org/paper/d8a01e805017e1bf4e218d3468d7ce9cc63bb754

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

Citations in the corpus

Environmental regulations, induced R&D, and productivity: Evidence from Taiwan's manufacturing industries (2012, unknown): “A relatively large number of studies have been conducted on another line of research that directly relates environmental regulation to competitiveness in terms of productivity to test the Porter hypothesis, but results have been inclusive (see Brännlund and Lundgren (2009) for a comprehensive review”
Environmental policies and productivity growth: a critical review of empirical findings (2015, background): “…a detailed review goes beyond the scope of this paper.3 Research in this area indicates that environmental policies are unlikely to be major determinants of a country’s competitiveness, trade or FDI patterns (see Jaffe et al., 1995; Brännlund and Lundgren, 2009, Ambec et al., 2013, for reviews).”
Environmental Regulation and Sustainable Competitiveness: Evaluating the Role of Firm-Level Green Investments in the Context of the Porter Hypothesis (2018, background): “Overall, rather non-general circumstances and mechanisms have to exist for the Porter hypothesis to hold (Brännlund, 2009).”
The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? (2010, unknown): “Brännlund and Lundgren (2009) reach similar conclusions about the more recent evidence on the strong version of the Porter Hypothesis.”