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:	2010-10-22
Authors:	Chowdhury, Prabal Roy
Institutions:	Economics and Econometrics Research Institute (EERI)
Subject:	Porter hypothesis \| abatement tax \| R&D \| hyperbolic discounting

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Extent:	application/pdf
Series:	EERI Research Paper Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number EERI_RP_2010_42
Classification:	H2 - Taxation, Subsidies, and Revenue ; L1 - Market Structure, Firm Strategy, and Market Performance ; L2 - Firm Objectives, Organization, and Behavior ; L5 - Regulation and Industrial Policy
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008684461