Nonlinear affect in Competitiveness and Firm Innovation by Environmental Policy Stringency; testing the Porter's Hypothesis
Subject Areas :
Environmental Economics
omidali adeli
1
,
yazdan goudarzi
2
,
ali akbar ebrahiminejad
3
1 - Associate Professor, Faculty of Economic and Administrative Sciences, University of Qom. Qom, Iran. *(Corresponding Author)
2 - Assistant Professor, Faculty of Economic and Administrative Sciences, University of Qom. Qom, Iran.
3 - PhD student in Islamic Economics, Faculty of Economic and Administrative Sciences, University of Qom. Qom, Iran.
Received: 2020-01-14
Accepted : 2020-11-17
Published : 2023-04-21
Keywords:
knowledge base economy,
innovation,
porter hypothesis,
environmental economics,
environmental regulation. Competiveness,
Abstract :
Background and Objective: One of the most prominent hypothesis in environmental economics is the Porter hypothesis. The Porter hypothesis argues that more stringent environmental policies can actually have a net positive effect on the competitiveness of regulated firms because such policies promote cost-cutting efficiency improvements, which in turn reduce or completely offset regulatory costs, and foster innovation in new technologies that may help firms achieve international technological leadership and expand market share. Given the importance of this hypothesis to policymakers and firms, many studies have been conducted to prove or disprove this hypothesis.
Material and Methodology: in this study, we used panel smooth transition regression for 25 OECD members during 2000-2015.
Findings: the results indicated that the weighted indicator of environmental policy stringency in linear and nonlinear part of the model had positive and significant effects on increasing the number of selected environmental technologies. The coefficient of variation was estimated to be 0.142 in the linear part and 0.213 in the nonlinear part. The speed of transition between the two regimes of weighted growth index of environmental policies, according to the estimated transition parameter, is 3.17.
Discussion and Conclusion: Analysis of results shows that when the weight index growth of environmental policies is low, the severity of the impact of independent and control variables on the number of selected environmental technologies will vary. Given the experience of developed countries, improving the state of the legal system and property rights, increasing official and state aid for environmental development, and increasing state funding for environmental research and development can play an effective role in improving competitiveness and enhancing enterprise innovation.
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Hicks, J.R. (1932) the Theory of Wages. Macmillan, London.
Morales-Lage, Rafael & Bengochea-Morancho, Aurelia & Martínez-Zarzoso, Inmaculada, 2016. "Does environmental policy stringency foster innovation and productivity in OECD countries? " Center for European, Governance and Economic Development Research Discussion Papers282, University of Goettingen, Department of Economics.
Johnstone, N., I. Hascic, and D. Popp (2010), “Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts”, Environmental and Resource Economics 45, 133-155.
Colletaz, G., and Hurlin, C., (2006), “Threshold Effects of the Public Capital Productivity: An International Panel Smooth Transition Approach”, Working Paper, 1/2006, LEO, Universitéd' Orléans.
Gonzalez, A., Terasvirta, T., Van Dijk, D., (2005), “Panel Smooth Transition Regression Models”, SEE/EFI Working Paper Series in Economics and Finance, No. 604.
Fok, D., Van Dijk, D., Franses, P., (2004), “A Multi-Level Panel STAR Model for US Manufacturing Sectors”, Working Paper, University of
Taghavi, Mahdi and Shakeri, Abbas and Mohammadi, Teimour and Sadeqi, AliAkbar (2015). Non-linear Relationship between Income and Energy Intensity in Selected Countries of MENA Region with an Emphasis on the Role of Financial Development and Openness. Iranian Journal of Economic Research, Volume: 20 Issue: 64: 1-26. (In Persion)
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Levinson, A., and M. Taylor. 2008. Unmasking the pollution haven effect. International Economic Review 49(1):223–54.
Antoine Dechezleprêtre, Misato Sato, The Impacts of Environmental Regulations on Competitiveness, Review of Environmental Economics and Policy, Volume 11, Issue 2, summer 2017, Pages 183–206 63:1056–64.
Brunel, C., and A. Levinson. 2013. Measuring environmental regulatory stringency. OECD Trade and Environment Working Papers no. 2013/05. Paris: OECD Publishing.
Botta, E. and T. Kozluk (2014): “Measuring environmental policy stringency in OECD countries: A composite index approach”, OECD Economics Department Working Papers, No. 1177, OECD Publishing.
Aghion, P., and P. Howitt. 1992. A model of growth through creative Econometrica 60(2):323–51.
Carraro, C., E. De Cian, L. Nicita, E. Massetti, and Verdolini. 2010. Environmental policy and technical change: a survey. International Review of Environmental and Resource Economics 4(2):163–219
Popp, D., R. Newell, and A. Jaffe. 2010. Energy, the environment, and technological change. In Handbook of the Economics of Innovation, vol. 2, ed. H. Hall and N. Rosenberg, 873–937. Amsterdam: Elsevier (.
Ambec, S., M. Cohen, S. Elgie, and P. Lanoie. 2013. The Porter hypothesis at 20: can environmental regulation enhance innovation and competitiveness? Review of Environmental Economics and Policy 7(1):2–22.
Hicks, J.R. (1932) the Theory of Wages. Macmillan, London.
Morales-Lage, Rafael & Bengochea-Morancho, Aurelia & Martínez-Zarzoso, Inmaculada, 2016. "Does environmental policy stringency foster innovation and productivity in OECD countries? " Center for European, Governance and Economic Development Research Discussion Papers282, University of Goettingen, Department of Economics.
Johnstone, N., I. Hascic, and D. Popp (2010), “Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts”, Environmental and Resource Economics 45, 133-155.
Colletaz, G., and Hurlin, C., (2006), “Threshold Effects of the Public Capital Productivity: An International Panel Smooth Transition Approach”, Working Paper, 1/2006, LEO, Universitéd' Orléans.
Gonzalez, A., Terasvirta, T., Van Dijk, D., (2005), “Panel Smooth Transition Regression Models”, SEE/EFI Working Paper Series in Economics and Finance, No. 604.
Fok, D., Van Dijk, D., Franses, P., (2004), “A Multi-Level Panel STAR Model for US Manufacturing Sectors”, Working Paper, University of
Taghavi, Mahdi and Shakeri, Abbas and Mohammadi, Teimour and Sadeqi, AliAkbar (2015). Non-linear Relationship between Income and Energy Intensity in Selected Countries of MENA Region with an Emphasis on the Role of Financial Development and Openness. Iranian Journal of Economic Research, Volume: 20 Issue: 64: 1-26. (In Persion)