The porter hypothesis and hyperbolic discounting

Prabal Roy Chowdhury

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.

MoreLess

Year of publication:	[2010]
Authors:	Chowdhury, Prabal Roy
Publisher:	Brussels, Belgium : EERI, Economics and Econometrics Research Institute
Subject:	Porter hypothesis \| abatement tax \| R&D \| hyperbolic discounting \| Theorie \| Theory \| Umweltpolitik \| Environmental policy \| Diskontierung \| Discounting \| Zeitkonsistenz \| Time consistency \| Intertemporale Entscheidung \| Intertemporal choice