Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/126548
Authors: 
Stoever, Jana
Weche, John P.
Year of Publication: 
2015
Series/Report no.: 
University of Lüneburg Working Paper Series in Economics 351
Abstract: 
We investigate the impact of environmental regulation on firm performance and investment behavior. Exploiting the case of a German water withdrawal regulation that is managed on the state level, we analyze firms' reactions to an increase in the water tax using a regression- adjusted difference-in-differences approach. We analyze the individual firm's response to a change in environmental regulation, distinguishing between add-on and integrated environ- mental investments. This allows us to include intra-firm innovations into our analysis, which are likely to be of importance for increasing resource-efficiency. Our results show that the regulation in question shows no sign of affecting firms' overall competitiveness. The results imply that the predicted negative impact of the regulation on firms' economic performance that was brought up before the introduction of the tax, does not seem to weigh heavily in this case. Nevertheless, when placed into a sustainable competitiveness context, the regulation considered does not qualify as an appropriate policy tool for fostering green growth.
Subjects: 
environmental regulation
DID
green growth
green investment
Porter hypothesis
sustainable competitiveness
water withdrawal regulation
JEL: 
L60
O31
O32
Q58
Q55
Document Type: 
Working Paper

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