Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185453
Authors: 
Ghosal, Vivek
Stephan, Andreas
Weiss, Jan F.
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7255
Abstract: 
Using a unique plant-level dataset we examine total factor productivity (TFP) growth and its components, related to efficiency change and technical change. The data we use is from Sweden and for their pulp and paper industry, which is heavily regulated due to its historically large contribution to air and water pollution. Our paper contributes to the broader empirical literature on the Porter Hypothesis, which posits a positive relationship between environmental regulation and “green” TFP growth of firms. Our exercise is innovative as Sweden has a unique regulatory structure where the manufacturing plants have to comply with plant-specific regulatory standards stipulated at the national level, as well as decentralized local supervision and enforcement. Our key findings are: (1) prudential regulation limits expansion of plants with high initial pollution; (2) regulation, however, is not conducive to plants’ “green” technical change, which provides evidence against the recast version of the Porter Hypothesis; (3) decentralized command-and-control regulation is prone to regulatory bias, entailing politically motivated discriminatory treatment of plants with otherwise equal characteristics.
Subjects: 
pollution
environmental regulations
plant-specific regulation
decentralized regulation
enforcement
political-economy
Porter Hypothesis
TFP
productivity
efficiency
technical change
pulp and paper industry
JEL: 
D24
L51
L60
Q52
Q53
Q58
Document Type: 
Working Paper

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