Wayne Gray Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
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Wayne Gray Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010

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Session 4: Effect of Environmental Regulation on Productivity and Competitiveness

Session 4: Effect of Environmental Regulation on Productivity and Competitiveness

Wayne Gray

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Wayne Gray Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010 Wayne Gray Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010 Presentation Transcript

  • The Porter Hypothesis at 20: The Effect of Environmental Regulation (ER) on Productivity and Competitiveness   Wayne Gray Economics Department, Clark University Porter at 20 - June-28-2010
  • Research Background
    • Joint work with Ronald Shadbegian, EPA-NCEE
    • Plant-level datasets for manufacturing industries
    • U.S. Census Bureau data
      • Inputs, output, productivity
      • Pollution Abatement Costs and Expenditures survey
      • Investment, age
    • EPA data
      • Enforcement and compliance
      • Emissions
    Porter at 20 - June-28-2010
  • ER and Productivity in the 1970s
    • <World Congress paper, 2010>
    • Pessimal (?) regulatory approach
      • Prescriptive and inflexible
      • Emphasis on end-of-pipe controls
      • Uncertainty, new regulations
    • Paper, oil, and steel industries
    • Negative impacts of ER on productivity
    • Worse for high R&D, high productivity plants
      • Possibly more affected by inflexibility of regulations?
    Porter at 20 - June-28-2010
  • Investment and Technology Choice
    • <Journal of Industrial Economics, 1998>
    • Pulp and paper mills
    • Abatement capital investment “crowds out” productive capital
      • May reflect capital budgeting at the plant level
      • Possible offset - “abatement” capital also seems to contribute to output (unlike other abatement inputs)
    • ER affects production technology choices
      • Stringent air regs -> don’t use air-polluting technology
    Porter at 20 - June-28-2010
  • Heterogeneity or Causality?
    • <Journal of Productivity Analysis, 2005>
    • Paper, oil, and steel industries
    • Stochastic frontier, both emissions and production
    • Higher abatement costs = less efficient on both
    • But, production and abatement efficiency measures are positively correlated
    • Possible heterogeneity in management quality
      • Better managers choose lower-cost abatement methods
      • Better managers produce more efficiently and cleaner
    Porter at 20 - June-28-2010