Is environmental regulation bad for competition? A survey

Heyes, Anthony

doi:10.1007/s11149-009-9099-y

Cited by 76 publications

(32 citation statements)

References 55 publications

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“…Moreover, as export-oriented firms develop the capabilities to comply with standards in their major export markets, so they may lobby governments to adopt similar environmental standards domestically (Vogel 1995). This is because: (a) producing a single product for both home and export markets allows firms to benefit from greater economies of scale; and (b) tightening domestic environmental product standards may grant exporters a commercial advantage over their home market competitors lacking requisite compliance technologies by raising the latter's relative costs (Bach and Newman 2007;Heyes 2009;Lazer 2001).…”

Section: Trading-up Via Exportsmentioning

confidence: 99%

“…(a) in the absence of higher standards, TNCs' beyond-compliance product technology may be price uncompetitive with the offerings of compliance-only local competitors; and (b) raising domestic environmental standards potentially places indigenous firms at a competitive disadvantage in that they may well find it more costly to comply (Heyes 2009;Rugman and Verbeke 1998).…”

Section: Investing-up Via Inward Fdimentioning

confidence: 99%

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Does the ‘California effect’ operate across borders? Trading- and investing-up in automobile emission standards

Perkins¹,

Neumayer²

2012

Journal of European Public Policy

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Original citation:Perkins, Richard and Neumayer, Eric (2012) Does the 'California effect' operate across borders? trading-and investing-up AbstractAccording to one line of argument, economic integration may lead to the ratcheting upwards of regulatory standards towards levels found in higher-regulating jurisdictions, a phenomenon referred to as the 'California effect'. Yet, at least in the case of public environmental policies, comparatively little systematic empirical work has been undertaken to examine whether international trade and investment with more stringently regulated countries leads to higher domestic environmental standards in lower-regulating economies. Our contribution seeks to fill this gap using a newly-constructed dataset measuring the stringency of domestic automobile emission standards. We find robust support for a trading-up effect in a sample of up to 147 developing countries: greater automobile and related components exports to countries with more stringent automobile emission standards are associated with more stringent domestic emission standards. Investing-up dynamics are also apparent, in that we find higher inward FDI in the automotive sector is associated with more stringent domestic automobile emission standards in host developing economies.

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Section: Trading-up Via Exportsmentioning

confidence: 99%

Section: Investing-up Via Inward Fdimentioning

confidence: 99%

Does the ‘California effect’ operate across borders? Trading- and investing-up in automobile emission standards

Perkins¹,

Neumayer²

2012

Journal of European Public Policy

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“…1 In particular, he highlights a threshold for market power to emerge. 2 Heyes (2009) identifies a significant body of theoretical and empirical research that points to the potential for environmental regulations to reduce product market competition. In this article, we restrict our analysis to pollution permit markets.…”

mentioning

confidence: 99%

Strategic manipulation of a pollution permit market and international trade

Bueb¹,

Schwartz

2011

J Regul Econ

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“…Moreover, environmental regulation may also increase firms' profits by reducing the cost of chemicals, lowering waste disposal and improving productivity by retiring old technology (Ambec et al, 2013). Heyes (2009) provides a comprehensive survey of theoretical and empirical research pointing to environmental regulation interacting with the strength of competition in product markets. The impact of regulation on market competition can occur in a number of different ways, which include firms' size and costs of regulation compliance, conditions of entry into a particular market, and competition distortion as regulations may act as subsidies (Heyes, 2009).…”

Section: The Porter Hypothesismentioning

confidence: 99%

“…regulation, through the reduction of product market competition (Heyes, 2009), enables firms to gain from the regulation, under certain conditions specified in our analytical framework. Firms' profits and social welfare are analysed under a homogeneous, n symmetric firms oligopoly product market, where production entails the generation of environmentally damaging emissions, which are taxed.…”

Section: The Porter Hypothesis: Conditions For Social and Private Gaimentioning

confidence: 99%

Emissions abatement R&D and environmental policy

Pereira¹

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This dissertation studies the interaction between environmental policy, market structure and firms' incentives to invest in emissions reduction technology or emissions abatement research and development (R&D). It consists of three individual papers. The first paper examines how the intensity of market competition may affect the environmental policy. The second paper studies the conditions under which the design of an environmental policy can be beneficial for firms and society. The third paper analyses the effect of environmental R&D organisational structures on firms' innovation activities, profits, and social welfare when the R&D outcome is uncertain.The first paper investigates the optimal environmental policy (the mix of emissions tax and R&D subsidy) when two firms, producing differentiated products, compete in the output market over time. Firms compete over supply schedules, which encompass a continuum of market structures from Bertrand to Cournot. While production generates environmentally damaging emissions, firms can undertake R&D, which has the sole purpose of reducing emissions. In addition to characterising the optimal policy, we examine how the optimal tax and subsidy, and the optimal level of abatement change as competition intensifies, as the dynamic parameters change and as the investment in abatement technology changes. In this setting, increased competition no longer necessarily leads to an increase in welfare. Instead, there are two forces. Competition increases welfare through its impact on the final goods price. However, lower prices result in larger quantities and more pollution. Our contribution is to show how this impact depends on the extent of the market, the nature of preferences and the technology.The Porter Hypothesis, formulated by Michael Porter (1991), states that a well-designed environmental policy could encourage innovation and be beneficial for firms and society. In the second paper, we investigate the conditions under which the design of an environmental policy can align social and private interests. Results consistent with the Porter Hypothesis are derived without any behavioural assumptions or bounded rationality arguments, as it is commonly the case in the related literature. N symmetric firms compete in the output market by producing and selling homogeneous goods. Production entails the emission of a pollutant, which may be taxed.The general conditions for firms' profits and social welfare to be higher under an emissions tax than under no tax are determined. The key insight is that, for the representative firm's profit to increase with an increase in emissions tax, the emissions tax cost pass-through must be greater ii than the net emissions per unit of production, adjusted for the number of competing firms. As the intensity of competition increases, firms are more likely to benefit from an emissions tax, as the tax facilitates the exercise of market power.The third paper analyses firms' and social planner's choices of R&D cooperation when the innovation outcome i...

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Is environmental regulation bad for competition? A survey

Abstract: Environmental regulation, Competition, Q58, L5,

Cited by 76 publications

References 55 publications

Does the ‘California effect’ operate across borders? Trading- and investing-up in automobile emission standards

Does the ‘California effect’ operate across borders? Trading- and investing-up in automobile emission standards

Strategic manipulation of a pollution permit market and international trade

Emissions abatement R&D and environmental policy

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