Environmental policy and profitability : evidence from Swedish industry

Abstract

The purpose of this paper is to investigate the existence of a “Porter effect” using firm level data on output and inputs from Swedish industry between 1990 and 2004. By utilizing a factor demand modeling approach, and specifying a profit function which has a technology component dependent upon firm specific effective tax on CO2, we are able to separate out the effect of regulatory pressure on technological progress. The results indicate that there is evidence of a reversed “Porter effect” in most industrial sectors, specifically energy intensive industries.

Keywords

CO2 tax; factor demands; induced technological change; Porter argument

Published in

Publisher: Umeå Economic Studies

SLU Authors

• Brännlund, Runar

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    
  • Umeå University

• Lundgren, Tommy

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    
  • Umeå University

UKÄ Subject classification

Economics and Business
Social Sciences
Environmental Sciences and Nature Conservation

Permanent link to this page (URI)

https://res.slu.se/id/publ/19801