The impact of pollution abatement investments on technology: Porter hypothesis revisited

This paper revisits the Porter hypothesis by pursuing two new directions. First, we compare the results obtained with two complementary approaches: parametric stochastic frontier analysis and conditional nonparametric frontier analysis. They presents relative advantages and drawbacks. Secondly, we pay attention not only on the average pollution abatement eort eect but we also focus on its variability across rms and over time. We provide new results suggesting that the traditional view about the eect of environmental regulation on productivity and the Porter hypothesis may coexist. This evidence supports the idea that a well-designed environmental regulation aects positively the rm performances in some instances.