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:	Chowdhury, Prabal Roy
Publisher:	Brussels : Economics and Econometrics Research Institute (EERI)
Subject:	Porter hypothesis \| abatement tax \| R&D \| hyperbolic discounting

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Series:	EERI Research Paper Series ; 42/2010
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	866407901 [GVK] hdl:10419/142603 [Handle] RePEc:eei:rpaper:EERI_RP_2010_42 [RePEc]
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:	EconStor

Persistent link: https://www.econbiz.de/10011496144