Decentralized environmental regulations and plant‐level productivity

Vivek Ghosal · Andreas Stephan · Jan Weiss

59 citations0/0 files storedBusiness Strategy and the Environment

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Environmental Sustainability in Business Energy, Environment, Economic Growth Regulation and Compliance Studies

Abstract

Abstract Using the framework provided by the Porter hypothesis, we study the impact of environmental regulations and enforcement policies on plant‐level green total factor productivity (TFP) growth and its components related to efficiency change and technical change. The detailed microdata we use are from Sweden and for the pulp and paper industry. This industry is the source of significant amounts of water and air pollution and is one of the most heavily environmentally regulated manufacturing industries. Sweden has a unique decentralized regulatory structure where the manufacturing plants have to comply with plant‐specific regulatory standards stipulated at the national level, as well as decentralized local supervision and enforcement. Our empirical results point to beneficial impacts of the environmental policies on plants' green TFP growth and sustainable production practices. We also find that political economy considerations are important, as the presence of the Green Party and aspects like plant size (with corresponding local and regional economic effects) matter in enforcement of the standards.

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References

1995Toward a New Conception of the Environment-Competitiveness Relationship 2005An Introduction to Efficiency and Productivity Analysis 2016Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries 1995Green and competitive: ending the stalemate 1999An Essay on Fiscal Federalism 2005Estimation and inference in two-stage, semi-parametric models of production processes 1997Productivity and Undesirable Outputs: A Directional Distance Function Approach 2007Data Envelopment Analysis

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