Roy Chowdhury, Prabal (2010): The Porter Hypothesis and Hyperbolic Discounting.
Download (117kB) | Preview
We examine pollution-reducing R&D by a monopoly firm producing a dirty product. In a dynamic framework with hyperbolic discounting, we establish conditions under which the Porter hypothesis goes through, i.e. environmental regulation increases R&D, thus reducing pollution, as well as increasing firm profits. This is likely to hold whenever R&D costs are at an intermediate level, and the planning horizon of the firms is large.
|Item Type:||MPRA Paper|
|Original Title:||The Porter Hypothesis and Hyperbolic Discounting|
|Keywords:||Porter hypothesis; abatement tax; R&D; hyperbolic discounting;|
|Subjects:||Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q50 - General
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation
D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - Monopoly
|Depositing User:||Prabal Roy Chowdhury|
|Date Deposited:||06. Jul 2010 16:58|
|Last Modified:||16. Feb 2013 06:44|
Barrett, S., 1994, Strategic environmental policy and international trade, Journal of Public Economics 54, 325-338.
O'Donoghue, T. and M. Rabin, 1999, Doing it now or later, American Economic Review 89, 103-124.
Downing, P. B., and L.J. White, 1986, Innovation in pollution control, Journal of Environmental Economics and Management 13, 18-29.
Gore, A., 1992, Earth in the Balance: Ecology and the Human Spirit, Houghton Mifflin, Boston, MA.
B. Kriechel, and T. Ziesemer, 2009, The Environmental Porter Hypothesis: Theory, Evidence and a Model of Timing of Adoption, Economics of Innovation and New Technology 18, 267 - 294.
Kuhn, T., 1970, The Structure of Scientific Revolutions, 2nd Edition, Chicago: University of Chicago.
Laibson, D., 1997, Golden eggs and hyperbolic discounting, Quarterly Journal of Economics 112, 443-477.
Mohr, R.D., 2002, Technical change, external economies and the Porter hypothesis, Journal of Environmental Economics and Management 43, 158-168.
Osang, T. and A. Nandy, 2003, Environmental regulation of polluting firms: Porter's hypothesis revisited, Brazilian Journal of Business Economics, 3, 129-148.
Palmer, K., W.E. Oates, and P.R. Portney, 1995, Tightening environmental standards: The benefit-cost or the no cost paradigm? Journal of Economic Perspectives 9, 119-132.
Phelps, E.S. and R.A. Pollack, 1968, On second best national saving and game-equilibrium growth, Review of Economic Studies 35, 185-199.
Porter, M., 1991, America's green strategy, Scientific American 264, 96.
Porter, M. and C. van der Linde, 1995, Toward a new conception of the environment-competitiveness relationship, Journal of Economic Perspectives 9, 97-118.
Portney, P.R., 1994, Does environmental policy conflict with economic growth? Resources 115, 21-23.
Roy Chowdhury, I., 2009, Incentives for Green R$\&$D in a Dirty Industry under Price Competition, Economics Bulletin 29, 1-10.
Simpson, D., and R. Bradford III, 1996, Taxing variable cost: environmental regulation as industrial policy, Journal of Environmental Economics and Management 30, 282-300.
Xepapadeas, A. and A. de Zeeuw, 1999, Environmental policy and competitiveness: The Porter hypothesis and the composition of capital, Journal of Environmental Economics and Management 37, 165-182.