IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v9y1995i4p97-118.html
   My bibliography  Save this article

Toward a New Conception of the Environment-Competitiveness Relationship

Author

Listed:
  • Michael E. Porter
  • Claas van der Linde

Abstract

Accepting a fixed trade-off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress. Studies finding high environmental compliance costs have traditionally focused on static cost impacts, ignoring any offsetting productivity benefits from innovation. They typically overestimated compliance costs, neglected innovation offsets, and disregarded the affected industry's initial competitiveness. Rather than simply adding to cost, properly crafted environmental standards can trigger innovation offsets, allowing companies to improve their resource productivity. Shifting the debate from pollution control to pollution prevention was a step forward. It is now necessary to make the next step and focus on resource productivity.

Suggested Citation

  • Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    • Handle: RePEc:aea:jecper:v:9:y:1995:i:4:p:97-118
    Note: DOI: 10.1257/jep.9.4.97
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.9.4.97
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hazilla, Michael & Kopp, Raymond J, 1990. "Social Cost of Environmental Quality Regulations: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 853-873, August.
    2. Wayne B Gray & Ronald J Shadbegian, 1993. "Environmental Regulation And Manufacturing Productivity At The Plant Level," Working Papers 93-6, Center for Economic Studies, U.S. Census Bureau.
    3. Dale W. Jorgenson & Peter J. Wilcoxen, 1990. "Environmental Regulation and U.S. Economic Growth," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 314-340, Summer.
    4. Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 77(5), pages 998-1006, December.
    5. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    2. You Wu & Jichuan Sheng & Fang Huang, 2015. "China’s future investments in environmental protection and control of manufacturing industry: lessons from developed countries," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 77(3), pages 1889-1901, July.
    3. Dietrich Earnhart & Dylan G. Rassier, 2016. "“Effective regulatory stringency” and firms’ profitability: the effects of effluent limits and government monitoring," Journal of Regulatory Economics, Springer, vol. 50(2), pages 111-145, October.
    4. Morgenstern, Richard D. & Pizer, William A. & Shih, Jhih-Shyang, 2002. "Jobs Versus the Environment: An Industry-Level Perspective," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 412-436, May.
    5. Rassier, Dylan G. & Earnhart, Dietrich, 2015. "Effects of environmental regulation on actual and expected profitability," Ecological Economics, Elsevier, vol. 112(C), pages 129-140.
    6. Richard D. Morgenstern & William A. Pizer & Jhih-Shyang Shih, 2001. "The Cost Of Environmental Protection," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 732-738, November.
    7. Pizer, William A. & Kopp, Raymond, 2005. "Calculating the Costs of Environmental Regulation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 25, pages 1307-1351, Elsevier.
    8. Dylan Rassier & Dietrich Earnhart, 2010. "Does the Porter Hypothesis Explain Expected Future Financial Performance? The Effect of Clean Water Regulation on Chemical Manufacturing Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(3), pages 353-377, March.
    9. Kennedy, Peter, 1994. "Innovation stochastique et coût de la réglementation environnementale," L'Actualité Economique, Société Canadienne de Science Economique, vol. 70(2), pages 199-209, juin.
    10. Stavins, Robert & Hahn, Robert & Cavanagh, Sheila, 2001. "National Environmental Policy During the Clinton Years," RFF Working Paper Series dp-01-38, Resources for the Future.
    11. Winston Harrington & Richard D. Morgenstern & Peter Nelson, 2000. "On the accuracy of regulatory cost estimates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(2), pages 297-322.
    12. Smith, Kerry & Schwabe, Kurt A. & Mansfield, Carol, 1997. "Does Nature Limit Environmental Federalism?," Working Papers 97-01, Duke University, Department of Economics.
    13. Robert Deacon & Charles Kolstad & Allen Kneese & David Brookshire & David Scrogin & Anthony Fisher & Michael Ward & Kerry Smith & James Wilen, 1998. "Research Trends and Opportunities in Environmental and Natural Resource Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 383-397, April.
    14. Ambec, Stefan & Barla, Philippe, 2001. "Productivité et réglementation environnementale: une analyse de l'hypothèse de Porter," Cahiers de recherche 0107, Université Laval - Département d'économique.
    15. Xu, Le & Yang, Lili & Li, Ding & Shao, Shuai, 2023. "Asymmetric effects of heterogeneous environmental standards on green technology innovation: Evidence from China," Energy Economics, Elsevier, vol. 117(C).
    16. Inge Mayeres, 1999. "The Distributional Impacts of Policies for the Control of Transport Externalities.An Applied General Equilibrium Model," Working Papers 1999.8, Fondazione Eni Enrico Mattei.
    17. Hahn, Robert W., 2000. "The Impact of Economics on Environmental Policy," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 375-399, May.
    18. Nicholas Howarth, 2011. "Clean Energy Technology and the Role of Non-Carbon Price-Based Policy: An Evolutionary Economics Perspective," European Planning Studies, Taylor & Francis Journals, vol. 20(5), pages 871-891, October.
    19. Li, Jianjun & Wu, Zhouyi & Feng, Lingbing, 2024. "How does environmental regulation affect corporate tax burdens? Evidence from China's environmental courts," Economic Modelling, Elsevier, vol. 130(C).
    20. Erik Biørn & Rolf Golombek* & Arvid Raknerud, 1998. "Environmental Regulations and Plant Exit," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(1), pages 35-59, January.

    More about this item

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:9:y:1995:i:4:p:97-118. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.