Template-type: ReDIF-Paper 1.0
Author-Name: Ziesemer, Thomas
Author-Email: t.ziesemer@algec.unimaas.nl
Author-Workplace-Name: Maastricht University, UNU-MERIT
Author-Name: Kriechel, Ben 
Author-Email: Ben@kriechel.eu 
Author-Workplace-Name: Maastricht University, ROA
Title: The Environmental Porter Hypothesis: Theory, Evidence and a Model of Timing of 
	 Adoption 
Abstract:  The Porter Hypothesis postulates that the costs of compliance with 
	 environmental standards may be offset by adoption of innovations they 
	 trigger. We model this hypothesis using a game of timing of technology 
	 adoption. We show that times of adoption are earlier the higher the 
	 non-adoption tax. The environmental tax turns the preemption game with 
	 low profits into a game with credible precommitment yielding high 
	 profits (pro-Porter). If there is a precommitment game without 
	 environmental taxes, the introduction of a tax leads to lower profits 
	 (anti-Porter). An evaluation of the empirical literature indicates that 
	 the Porter hypothesis holds even for profit-maximizing firms under 
	 multiple market imperfections such as imperfect competititon, 
	 X-inefficiency, and agency costs. These are more likely to be present in 
	 sectors with large firms. In many case studies that we evaluate, though, 
	 we detect an element of explicit or implicit subsidies for 
	 environmentally friendly behaviour, which is in line with Pigovian 
	 policies. 
Classification-JEL: Q2, F1, H7, O3
Keywords: Environmental Policy, Strategic Trade Theory, Technology Adoption,
	 Porter Hypothesis
Series: UNU-MERIT Working Papers
Creation-Date: 2007
Number: 024
File-URL: http://www.merit.unu.edu/publications/wppdf/2007/wp2007-024.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2007024