The Porter hypothesis and hyperbolic discounting

We examine pollution-reducing R&D by a monopoly firm producing a dirty product. In a dynamic framework with hyperbolic discounting, we establish conditions under which the Porter hypothesis goes through, i.e. environmental regulation increases R&D, thus reducing pollution, as well as increasing firm profits. This is likely to hold whenever R&D costs are at an intermediate level, and the planning horizon of the firms is large.

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Year of publication:	2011
Authors:	Chowdhury, Prabal Roy
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 31.2011, 1, p. 167-176
Publisher:	AccessEcon
Subject:	Porter hypothesis \| abatement tax \| R&D \| hyperbolic discounting

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Classification:	Q5 - Environmental Economics ; L2 - Firm Objectives, Organization, and Behavior
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008784671