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:	2010
Authors:	Roy Chowdhury, Prabal
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Porter hypothesis \| abatement tax \| R&D \| hyperbolic discounting

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	Q50 - Environmental Economics. General ; D78 - Positive Analysis of Policy-Making and Implementation ; D42 - Monopoly
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008568617