Command-and-Control Revisited: Environmental Compliance and Innovation in Swedish Industry 1970-1990

31 Pages Posted: 29 Jan 2012

See all articles by Ann-Kristin Bergquist

Ann-Kristin Bergquist

University of Umea - Department of Geography and Economic History

Kristina Söderholm

Lulea University of Technology (LTU)

Hanna Kinneryd

Lulea University of Technology (LTU)

Magnus Lindmark

University of Umea - Centre for Environmental and Resource Economics (CERE)

Patrick Söderholm

Lulea University of Technology (LTU)

Date Written: January 27, 2012

Abstract

This paper addresses the issue of environmental policy instrument choice for achieving deep emissions reductions in the industrial sector. Specifically, it provides: (a) a theoretical review of the conditions under which performance standards can provide efficient incentives for environmental compliance and innovation; and (b) an analysis of the design and the outcomes of the standards-based regulation of industrial pollutants in Sweden during the period 1970-1990. The empirical findings suggest that the Swedish regulatory approach comprised many key elements of an efficient policy-induced transition towards radically lower emissions in the metal smelting and pulp and paper industries. The regulation relied heavily on performance standards, thus granting flexibility to firms in terms of selecting the appropriate compliance measures, and the standards were implemented in combination with extended probation periods. R&D projects and the new knowledge that was advanced incrementally in interaction between the company, the environmental authorities and the research institutions provided a direct catalyst to the regulatory process. As such the Swedish regulatory approach provided scope for creative solutions, environmental innovation, and permitted the affected firms to coordinate pollution prevention measures with productive investments.

Keywords: industry, pollution control, command-and-control policy, innovation, Sweden

JEL Classification: N54

Suggested Citation

Bergquist, Ann-Kristin and Söderholm, Kristina and Kinneryd, Hanna and Lindmark, Magnus and Söderholm, Patrick, Command-and-Control Revisited: Environmental Compliance and Innovation in Swedish Industry 1970-1990 (January 27, 2012). CERE Working Paper, 2012:2, Available at SSRN: https://ssrn.com/abstract=1992941 or http://dx.doi.org/10.2139/ssrn.1992941

Ann-Kristin Bergquist (Contact Author)

University of Umea - Department of Geography and Economic History ( email )

Umeå, S-901 87
Sweden

Kristina Söderholm

Lulea University of Technology (LTU) ( email )

Hanna Kinneryd

Lulea University of Technology (LTU) ( email )

Magnus Lindmark

University of Umea - Centre for Environmental and Resource Economics (CERE) ( email )

Umeå, S-901 87
Sweden

Patrick Söderholm

Lulea University of Technology (LTU) ( email )

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