The Porter hypothesis asserts that properly designed environmental regulation motivates firms to innovate, which ultimately improves profitability. In this study, we test empirically the Porter hypothesis and the competing hypothesis that regulation undermines profitability (“costly regulation...

For years, scholars and environmental policymakers have conducted a spirited debate about the comparative merits of two different approaches to enforcement of the nation's environmental laws - the coercive (or deterrence-based) and cooperative approaches. Supporters of the coercive model regard...