INNOVATION, COST AND REGULATION: PERSPECTIVES ON

0,13

MB

BUSINESS, POLICY AND LEGAL FACTORS AFFECTING THE COST OF

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ENVIRONMENTAL COMPLIANCE

482

ID

ENVIRONMENTAL LAW INSTITUTE

1999

rok

Table of Contents

Introduction 1

IThe Hypothesis that Environmental Regulation May Result in Lower Costs or Net Profits 1

IITraditional economic views 4

ACritiques of the Porter Hypothesis 4

BElements Supportive of the Porter Hypothesis 7

IIIIdentifying the Factors Relevant to the Porter Hypothesis 8

AThe Design of Environmental Regulation 8

BEconomic and Other Factors Within the Firm 12

1Environmental regulation may increase research 15

2Organizational structure and incentives in firms 16

3Accounting information consistently under-represents the benefits of pollution reduction 18

4Overcoming static mind-set and industry inertia 18

CReasons arising from factors from without firm 19

1Cross-industry gains - some costs won't be borne by firms until all must do so 19

2Industry structure may preclude innovation 19

3Outside experts tend to promote end-of-pipe solutions 20

4Regulation may eliminate inefficient plants 20

5Regulation adds green market 21

6Timing in regulation life cycle 21

7There may be net economic gains to society due to market imperfections 22

IVConclusion 23

Appendix 30