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Are More Innovative Firms Less Vulnerable to New Environmental Regulation?

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Abstract

Compliance with pollution limits and standards requires firms to implement adaptation processes that are not only costly themselves but also affect future profits in as much as they modify production systems and methods. This paper attempts to respond to the question of how technological knowledge moderates the effect that the implementation of a new environmental regulation has on the results of affected firms. The regulation selected for this study is the Integrated Pollution Prevention and Control Act (IPPC). A Multivariate Regression Model (MVRM) has been applied to the regulatory event. The most important implication of this paper is that technological knowledge prepares a firm for adapting to a greater environmental demand such as may be derived from a new regulation.

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Authors and Affiliations

  1. Department of Economics and Business Management, Facultad de CC. EE y EE., University of Zaragoza, Gran Vía, 2, 50005, Zaragoza, Spain

    Joaquín Cañón-de-Francia, Concepción Garcés-Ayerbe & Marisa Ramírez-Alesón

Authors
  1. Joaquín Cañón-de-Francia
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  2. Concepción Garcés-Ayerbe
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  3. Marisa Ramírez-Alesón
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Corresponding author

Correspondence to Joaquín Cañón-de-Francia.

Additional information

This paper has been developed under the objectives of the CREVALOR Research Group (DGA-Spain). Moreover, it has been financed by the MEC-FEDER Research Project SEJ2005-07341.

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Cañón-de-Francia, J., Garcés-Ayerbe, C. & Ramírez-Alesón, M. Are More Innovative Firms Less Vulnerable to New Environmental Regulation?. Environ Resource Econ 36, 295–311 (2007). https://doi.org/10.1007/s10640-006-9023-1

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  • DOI: https://doi.org/10.1007/s10640-006-9023-1

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