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Abstract:
Empirical surveys find no significant impact of environmental regulation and environmental costs on international competitiveness. In the literature, we can find three hypotheses on the impact of environmental regulation. For the industrial-flight and pollution-haven hypothesis, there is no clear empirical evidence. We show that this is a logical consequence of the principle of comparative advantage. Another explanation can be that developed countries have very diversified exports and most surveys do not link regulation to specific products. We therefore investigate the link between export diversification and two measures of labor productivity. The Porter hypothesis--the third or revisionist hypothesis in our overview--states that environmental regulation can lead to improved competitiveness. Many authors only find "anecdotal" evidence for this hypothesis, but we show that when regulation is linked to specific products, there is clear evidence for the Porter hypothesis. In our model, we work with international CFC-regulation (chlorofluorocarbons) and the export performance of CFC-using industries like refrigerators, freezers and air conditioning machines. A final section does focus on the tradition of cartelization that has been typical in many of the old--and "dirty"--industries.

Abstract:
Empirical surveys find no significant impact of environmental regulation and environmental costs on international competitiveness. We show that this is a logical consequence of the principle of comparative advantage. Other explanations can be that developed countries have very diversified exports and that most surveys do not link regulation to specific products. The Porter hypothesis states that environmental regulation can lead to improved competitiveness. Many authors only find 'anecdotal' evidence for this hypothesis but we show that when regulation is linked to specific products -- we analysed CFC-using industries -- there is clear evidence for the Porter hypothesis.

Abstract:
In Capitalism, Socialism and Democracy (CSD, 1942), Schumpeter presents his paradoxical thesis that capitalism will destroy its own foundation, not by failure but by its success. He argues that the emergence of unfavourable circumstances will activate strong opposition from social critics and intellectuals. Considering the recent growth in national and international environmental legislation and the subsequent emergence of rather vague ecological concepts like sustainable development and the precautionary principle - both challenging economic growth - one could argue that modern environmentalism is one of the most powerful forces that will further impact capitalism as we know it. Did Schumpeter foresee this evolution and what are the mechanisms that did lead to this situation? We discuss aspects of Schumpeterian issue entrepreneurship and relate these to theories on the emergence of environmental regulation, the expansion of environmental organisations, the use of new instruments in environmental policy and pro-active business strategies. Where possible, recent developments in climate policy, acid rain policy and biotechnology policy are integrated in the analysis.

Environmental policy, political entrepreneurs, economic instruments

Abstract:
Environmental policy instruments have an impact on the incentives to invest in environmental R&D and this link should deserve careful consideration when introducing new instruments. Some authors argue that evironmental taxes and tradable permits have rather comparable impacts on environmental R&D but we think that only very specific conditions do lead to this kind of conclusions. If we broaden the perspective by integrating elements from the Industrial Organisation literature and depart for Pigouvian settings, a market-driven approach would link the incentive to invest in new technologies to the market potential offered by the policy instruments. If taxes turn out to be very expensive for the polluting or emitting industries, we can assume that these targeted firms would be more interested to invest in new - emission reducing - technologies than in cases where the choosen policy instrument will lead to a very limited cost. We therefore developed a dynamic model that enables to compare the incentives on environmental R&D resulting from taxes, emission trading, voluntary approaches and subsidizing environmental R&D. We do not claim to capture all relevant market interactions, but our findings confirm the intuition that environmental taxes have a clearly different impact on environmental R&D compared to emission trading.

Abstract:
The paper investigates how a system of emission trading can stimulate the diffusion of cleaner vehicles. We start from cross-sectoral energy efficiency investment opportunities that are found in data on CO2 emissions during the production and the use of cars and trucks. We therefore elaborate the introduction of tradable certificates that are allocated or grandfathered to manufacturers that provide vehicles (and other durable goods) that enable their costumers to reduce their own CO2 emissions. Manufacturers can then sell these certificates on the emission market and use the revenues to lower the price of their cleanest vehicles. This mechanism should partially overcome the price difference with less efficient cars. When the new allowances are taken from the pool of grandfathered emissions, total emissions remain the same but the lower average emission reduction cost reduces the total cost of climate protection policy.

emission trading, greenhouse gases, energy efficiency, clean technologies, car and truck industry