Is Environmental Regulation Harmful for Competitiveness? The Applicability of the Porter Hypothesis to Tourism

Abstract

The importance of environmental quality for tourism industries can hardly be overestimated. However, high environmental quality often requires public intervention, which can lead to an increased cost burden and, eventually, to a loss of competitiveness. The Porter hypothesis (PH) proposes a mechanism to make this trade-off less grim or to even avoid it. The assertions of the PH have been tested thoroughly for the manufacturing sectors; however, in the service sectors and, more specifically, in the tourism sector, the applicability of the mechanism proposed by the PH has so far not been explored in its full formulation. At the same time, due to the very distinct nature of the tourism product, the findings of works focused on different sectors cannot be applied in a straightforward manner to the tourism sector. The aim of this article is to take a look at the relationship between environmental quality and tourism competitiveness from the perspective of the PH.