NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Environmental Regulation and Innovation: A Panel Data Study

Adam B. Jaffe, Karen Palmer

NBER Working Paper No. 5545
Issued in April 1996
NBER Program(s):   PR

In a 1991 essay in Scientific American, Michael Porter suggested that environmental regulation may have a positive effect on the performance of domestic firms relative to their foreign competitors, by stimulating domestic innovation. We examine the stylized facts regarding environmental expenditures and innovation in a panel of manufacturing industries. We find that lagged environmental compliance expenditures have significant positive effect on R&D expenditures when we control for unobserved industry-specific effects. We find little evidence, however, that industries' inventive output (as measured by patent applications) is related to compliance costs).

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Document Object Identifier (DOI): 10.3386/w5545

Published: Review of Economics and Statistics (1997): 610-619. citation courtesy of

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