Abstract
We determine the emergence of the Porter Hypothesis in a large oligopoly setting where the industry-wide adoption of green technologies is endogenously determined as a result of competition among coalitions. We examine a setting where the initial technology is polluting, firms decide whether to be brown or green and compete in quantities. We find that the Porter hypothesis may emerge as a market configuration with all green firms spurred by environmental regulation, even if consumers are not environmentally concerned. Finally, we single out the necessary and sufficient conditions under which the green grand coalition is socially optimal and therefore yields a win-win outcome.
Highlights
Over the last two and a half centuries, since the very beginning of the industrial revolution, the bulk of industrial activities and the associated growth of the world economy have relied on brown energy delivered by the intensive exploitation of nonrenewable fossil fuels
The key question is: will a number of energy-intensive industries, or even the whole world economy put itself on a sustainable growth path?2 Is there any hope that large populations of profit-seeking corporations will turn themselves “green” as a reaction to a changing landscape, by positively responding to the introduction of new regulatory instruments building up binding limits to the environmental impact of firms’ activities? According to the Porter hypothesis (Porter 1991), we may expect profit-seeking firms to behave like that, expecting to be better off if they do so, under appropriate policy stimuli
6 Concluding remarks In this paper, we have examined the emergence of the Porter Hypothesis in a large oligopoly where the adoption of green technologies is endogenously determined as a result of competition among coalitions
Summary
Over the last two and a half centuries, since the very beginning of the industrial revolution, the bulk of industrial activities and the associated growth of the world economy have relied on brown energy delivered by the intensive exploitation of nonrenewable fossil fuels. Over more than 2 decades, the Porter hypothesis (PH, hereafter) has generated a lively trend of thought about the existence of promising links between public environmental concern and firms’ green strategies (or the lack thereof) The foundation of this debate asserts the possible existence of positive private returns to pollution control investment, possibly large enough to more than offset the cost of compliance. The PH in its strong version does not hold in general, its emergence depending on the type of environmental innovation applied This caveat notwithstanding, empirical analysis, and case studies seem to confirm that accurate design of regulatory measures, possibly in a flexible form, may be conducive to win–win solutions (see Majumdar and Marcus 2001; Partzsch 2009; Costa and Ferrao 2010; Costa et al 2010).
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
