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Report, 2008

Environmental policy and profitability

Brännlund, Runar; Lundgren, Tommy


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.


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

Published in

Publisher: Umeå Economic Studies

    SLU Authors

    • UKÄ Subject classification

      Economics and Business
      Social Sciences
      Environmental Sciences related to Agriculture and Land-use

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