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The Impact of Environmental Regulation on Firm and Country Competitiveness: A Meta-analysis of the Porter Hypothesis

Cohen, MA; Tubb, A; (2018) The Impact of Environmental Regulation on Firm and Country Competitiveness: A Meta-analysis of the Porter Hypothesis. Journal of the Association of Environmental and Resource Economists , 5 (2) pp. 371-399. 10.1086/695613.

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Abstract

Since the early 1990s, the validity of the Porter hypothesis has been the focus of intense research to establish whether well-designed environmental regulation may enhance—rather than reduce—competitiveness. However, little consensus exists on the extent to which environmental regulation might generate profitability enhancing innovation offsets. This paper reports on a meta-analysis of 103 publications that estimate the relationship between environmental regulation and firm- or country-level productivity or competitiveness. We find considerable heterogeneity in both the sign and significance level of over 2,000 estimated “effect sizes” in these studies. A positive effect of environmental regulation is more likely at the state, region, or country level, compared to facility, firm, or industry level—although in both cases the most likely scenario is statistical insignificance. These findings are consistent with the strong version of the Porter hypothesis whereby strict but flexible environmental regulations induce innovation and over time increase country-level competitiveness.

Type: Article
Title: The Impact of Environmental Regulation on Firm and Country Competitiveness: A Meta-analysis of the Porter Hypothesis
DOI: 10.1086/695613
Publisher version: https://doi.org/10.1086/695613
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Competitiveness, Environmental policy, Financial performance, Porter hypothesis.
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > Engineering Science Faculty Office
URI: http://discovery.ucl.ac.uk/id/eprint/10058162
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