The Porter Hypothesis: The Porter Hypothesis: Regulation and Regulation and

ProductivityProductivity

J. Laurent-LucchettiJ. Laurent-Lucchetti

University of Bern and Oeschger Center for University of Bern and Oeschger Center for Climate ChangeClimate Change

Lanoie, Patry, Lajeunesse, Lanoie, Patry, Lajeunesse, 2008.2008.

Macro data: 17 Sectors, Quebec Macro data: 17 Sectors, Quebec manufacturing firms, 1985-1994.manufacturing firms, 1985-1994.

Key feature: estimation of the Key feature: estimation of the dynamicdynamic effect. Impact of regulation effect. Impact of regulation at at tt on productivity at on productivity at t+1.t+1.

ProductivityProductivity: TFP (Macro), : TFP (Macro), RegulationRegulation: : investment in pollution-control investment in pollution-control equipment. equipment.

Lanoie, Patry, Lajeunesse, Lanoie, Patry, Lajeunesse, 2008.2008.

Results: Results:

Contemporaneous effect of env. Contemporaneous effect of env. regulation on productivity is regulation on productivity is negativenegative..

Lagged effect is Lagged effect is positivepositive..

Effect stronger for firms exposed to Effect stronger for firms exposed to international competitioninternational competition, and , and less less pollutive firms.pollutive firms.

Lanoie, Laurent-Lucchetti, Lanoie, Laurent-Lucchetti, Johnstone, Ambec, 2010. Johnstone, Ambec, 2010.

Micro data: OECD, survey, 4200 firms Micro data: OECD, survey, 4200 firms among 7 countries. among 7 countries.

Key feature: Rich and unique database, Key feature: Rich and unique database, allows to disentangle and test for each allows to disentangle and test for each element of the causality chain.element of the causality chain.

Results: Results: Positive impact of regulation on green R&D Positive impact of regulation on green R&D

investment.investment. Positive impact of green R&D Investment Positive impact of green R&D Investment

on profits.on profits.

Lanoie, Laurent-Lucchetti, Lanoie, Laurent-Lucchetti, Johnstone, Ambec, 2010.Johnstone, Ambec, 2010.

Lanoie, Laurent-Lucchetti, Lanoie, Laurent-Lucchetti, Johnstone, Ambec, 2010. Johnstone, Ambec, 2010.

Results, test of various « version » of the Results, test of various « version » of the Hypothesis:Hypothesis: Strong support for the « weak » versionStrong support for the « weak » version: :

environmental regulation stimulates environmental regulation stimulates environmental innovationsenvironmental innovations

Qualified support for the Qualified support for the « « narrownarrow »  » versionversion: : flexible environmental policy regimes => flexible environmental policy regimes => greater incentive to innovate.greater incentive to innovate.

No support for the No support for the « « strongstrong »  » versionversion: : negative negative impact overall of regulation on profits (caveat: impact overall of regulation on profits (caveat: static data).static data).