Win-win opportunities & environmental regulation: Testing of porter hypothesis for Indian manufacturing industries

This paper studies the effect of environmental regulation relating to water pollution by the Indian industry on the productive efficiency of firms. The panel data of 92 water- polluting firms for the three years 1996-97, 1997-98, and 1998-99 are used to test the Porter hypothesis of having win-win opportunities for the firms subjected to the regulation. The main empirical result is that the technical efficiency of firms increases with the intensity of environmental regulation and the water conservation efforts there by supporting the Porter hypothesis.