Environmental Regulation and Innovation: A Panel Data Study
1997/11/01 by Adam B. Jaffe, Karen Palmer · 2,170 citations
Economics, Econometrics and Finance · Energy · #Business #Climate Change Policy and Economics #Competitor analysis #Compliance (psychology) #Control (management) #Econometrics #Economics #Energy, Environment, Economic Growth #Energy, Environment, and Transportation Policies #Environmental compliance #Environmental regulation #Industrial organization #Macroeconomics #Management #Manufacturing #Marketing #Panel data #Porter hypothesis #Public economics #Stylized fact
paper · doi:10.1162/003465397557196
published in The Review of Economics and Statistics 79(4), 610-619 (The MIT Press)
openalex publication_date 1997/11/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/06
Abstract
In a 1991 essay in Scientific American, Michael Porter suggested that environmental regulation may have a positive effect on the performance of domestic firms relative to their foreign competitors by stimulating domestic innovation. We examine the stylized facts regarding environmental expenditures and innovation in a panel of manufacturing industries. We find that lagged environmental compliance expenditures have a significant positive effect on R&D expenditures when we control for unobserved industry-specific effects. We find little evidence, however, that industries' inventive output (as measured by successful patent applications) is related to compliance costs.
Citations
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