Scandinavian Working Papers in Economics
Umeå Economic Studies,
Umeå University, Department of Economics
No 750: Environmental policy and profitability - Evidence from Swedish industry
Runar Brännlund () and Tommy Lundgren ()
Additional contact information
Runar Brännlund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Tommy Lundgren: Department of Forest Economics, Swedish University of Agricultural Sciences, Postal: S 901 83 Umeå, Sweden
Abstract: The purpose of this paper is to investigate the existence of a “Porter effect” using firm level data on output and inputs from Swedish industry between 1990 and 2004. By utilizing a factor demand modeling approach, and specifying a profit function which has a technology component dependent upon firm specific effective tax on CO2, we are able to separate out the effect of regulatory pressure on technological progress. The results indicate that there is evidence of a reversed “Porter effect” in most industrial sectors, specifically energy intensive industries.
Keywords: CO2 tax; factor demands; induced technological change; Porter argument
34 pages, October 10, 2008
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