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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

4 Issues per year


IMPACT FACTOR 2016: 0.252
5-year IMPACT FACTOR: 0.755

CiteScore 2016: 0.48

SCImago Journal Rank (SJR) 2016: 0.330
Source Normalized Impact per Paper (SNIP) 2016: 0.526

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ISSN
1935-1682
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Volume 4, Issue 1 (Jun 2005)

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Volume 6 (2006)

Volume 4 (2004)

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Volume 1 (2001)

Uncertain R&D and the Porter Hypothesis

David Popp
Published Online: 2005-06-22 | DOI: https://doi.org/10.2202/1538-0645.1423

Abstract

Ever since Michael Porter proposed that environmental regulations can improve competitiveness, much economic research has examined the potential for such outcomes. Attempts to model Porter hypothesis outcomes in a way consistent with neoclassical economics have focused on things such as strategic relationships between firms, moral hazard problems, and economies of scale. In this paper, I offer a simpler alternative. The results of any R&D project are uncertain. Calibrating a simple model of induced R&D with uncertainty so that the expected value of research is only positive with environmental policy, I find that between 8 and 24 percent of simulations result in cases where post-regulation profits are higher than pre-regulation profits. This result is consistent both with Porter finding specific cases with complete innovation offsets and with macro-level findings that environmental policy is not costless. I conclude by discussing the implication of these results for environmental policy and future research.

This article offers supplementary material which is provided at the end of the article.

Keywords: Porter hypothesis; R&D; uncertainty; induced innovation; technological change

About the article

Published Online: 2005-06-22


Citation Information: Contributions in Economic Analysis & Policy, ISSN (Online) 1538-0645, DOI: https://doi.org/10.2202/1538-0645.1423.

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©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston. Copyright Clearance Center

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Citing Articles

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[1]
Adam H. Cave
Multinational Business Review, 2014, Volume 22, Number 1, Page 78
[2]
Anabel Zárate-Marco and Jaime Vallés-Giménez
European Journal of Law and Economics, 2015, Volume 40, Number 2, Page 313

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