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Environmental regulation, green R&D and the Porter hypothesis

Indrani Roy Chowdhury (Department of Economics, Jamia Millia Islamia University, New Delhi, India)
Sandwip K. Das (School of International Studies, Jawaharlal Nehru University, New Delhi, India)

Indian Growth and Development Review

ISSN: 1753-8254

Article publication date: 27 September 2011

Abstract

Purpose

The purpose of this paper is to examine the effects of environmental regulation on green R&D, as well as to characterize the conditions under which the Porter hypothesis, both the weak as well as the strict version, may or may not hold.

Design/methodology/approach

The authors use a simple two‐stage model with environmental R&D and endogenously determined abatement costs to address these issues.

Findings

In a monopoly framework, the authors identify a channel arising out of the replacement effect that may increase R&D incentives following stricter regulation. It was found that the Porter hypothesis, both the weak as well as the strong version, is likely to hold if the new technology is relatively efficient in production, but not otherwise.

Originality/value

The paper makes a contribution towards the debate on the relationship between environmental regulation and green R&D, in particular the extremely influential Porter hypothesis.

Keywords

Citation

Roy Chowdhury, I. and Das, S.K. (2011), "Environmental regulation, green R&D and the Porter hypothesis", Indian Growth and Development Review, Vol. 4 No. 2, pp. 142-152. https://doi.org/10.1108/17538251111172041

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited