The Environmental Porter Hypothesis as a Technology Adoption Problem?

The Porter Hypothesis postulates that the costs of compliance with environmental standards may be offset by adoption of innovations they trigger. We model this hypothesis using a game of timing of technology adoption. We show that times of adoption are earlier the higher the non-adoption tax. The environmental tax turns the preemption game with low profits into a game with credible precommitment yielding high profits (pro-Porter). If there is a precommitment game without environmental taxes, the introduction of a tax leads to lower profits (anti-Porter).economics of technology ;

The Environmental Porter Hypothesis as a Technology Adoption Problem?

The Porter Hypothesis postulates that the costs of compliance with environmental standards may be partially or even fully offset by adoption of innovations they trigger. The timing of the adoption aspect of the Porter Hypothesis has not been captured in formal theory so far. We show in this paper how the Porter Hypothesis can be approached using a model of technology adoption. In the Reinganum-Fudenberg-Tirole game of timing, a firm adopts earlier under stricter environmental taxation, and under some circumstances can credibly precommit to early adoption. We show that all times of adoption - preemption, following and joint late adoption - are earlier the higher the non-adoption tax. Under preemption the firm of the country that varies environmental taxes will adopt first with certainty indicating increased competitiveness, but get lower profits than without environ- mental policy. Thus the Porter Hypothesis of increasing overall profits is rejected.economics of technology ;

Taxation and Technology Adoption: A Hotelling Approach

Environmental regulation and competitiveness are issues that seem to be at odds. However, the `Porter Hypothesis' states that firms can actually gain in competitiveness if they are subject to stricter environmental regulation. We show in a simple model the basic setting of the problem to apply it then to a Hotelling framework. A non-adoption tax (adoption subsidy) is shown to destroy a non-adoption equilibrium in a closed economy model. We show that taxes not directly targeting the non-adoption problem may fail to have an adoption incentive on the firms. In an open economy model the Porter Hypothesis is shown to hold if (i) non-adoption taxes are higher than adoption costs for one country and lower for the other, and (ii) the returns of second adoption are insufficient to cover the net adoption costs.environmental regulations, industrial competitiveness, taxation

Workforce Reorganization and the Worker

In this paper we study the joint decision process of changing the structure of jobs and laying off individual workers in a firm that downsizes its workforce. A hierarchical decision model is proposed and estimated using personnel data from a firm in demise comparing the characteristics of the individual workers and the structure of the firm's labour force before and after its reorganization. Our results show that workers in jobs in the top levels of each skill group's hierarchy are better protected against downsizing due to larger productivity shocks and larger firing costs.hierarchies, restructuring, control span, job displacement

Wage Structure and Labor Mobility in the Netherlands 1999-2003

In this paper we document the wage structure and labor mobility in the Netherlands in the period 1999-2003. We explain the importance of wage-setting institutions in the Netherlands and the main actors. The analyses are based on administrative sources allowing for comparisons between and within firms, and in which workers can be followed over time. In the period investigated the Netherlands experienced an increase in wage inequality. Despite the centralized system of wage negotiations in the Netherlands, our findings suggest that market forces were the main determinant of wage growth. Workers with similar wages experienced similar wage increases in firms of different sizes. Wages increases were larger for low-skilled workers in industries with large increases in demand than in other industries. Variation in wage growth was mainly at the individual level. Firm-level wage increases accounted for only 12 % of the total variation.

Heterogeneity among Displaced Workers

We combine post-displacement survey data with information from a displacing firm's personnel files in order to reveal sources of worker heterogeneity in search time and wage losses. First, we detail how experience-related characteristics affect workers' labour market careers during a period of three years after the bankruptcy of the firm. We find that wage losses are large. Interestingly, firm, rank, or job tenure do not explain observed wage differences. Idiosyncratic ability, job rotations prior to displacement, and differences in pre- and post-displacement job characteristics contribute most to observed variations in wages. The individual post-displacement labor market histories allow for testing the Blanchard-Diamond (1994) ranking model for which we find no support. We then develop a dynamic reservation wage updating model. The method of updating is based on the simple idea that job seekers are informed about successful matches of their former colleagues (Rees, 1966; Granovetter, 1974). The model fits the data well.idiosyncratic ability, mass lay-off, social networks, unemployment

The Environmental Porter Hypothesis: Theory, Evidence and a Model of Timing of Adoption

The Porter Hypothesis postulates that the costs of compliance with environmental standards may be offset by adoption of innovations they trigger. We model this hypothesis using a game of timing of technology adoption. We show that times of adoption are earlier the higher the non-adoption tax. The environmental tax turns the preemption game with low profits into a game with credible precommitment yielding high profits (pro-Porter). If there is a precommitment game without environmental taxes, the introduction of a tax leads to lower profits (anti-Porter). An evaluation of the empirical literature indicates that the Porter hypothesis holds even for profit-maximizing firms under multiple market imperfections such as imperfect competititon, X-inefficiency, and agency costs. These are more likely to be present in sectors with large firms. In many case studies that we evaluate, though, we detect an element of explicit or implicit subsidies for environmentally friendly behaviour, which is in line with Pigovian policies.Environmental Policy, Strategic Trade Theory, Technology Adoption, Porter Hypothesis