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Environmental and Resource Economics

, Volume 41, Issue 4, pp 519–539 | Cite as

Did the Invisible Hand Need a Regulatory Glove to Develop a Green Thumb? Some Historical Perspective on Market Incentives, Win-Win Innovations and the Porter Hypothesis

  • Pierre DesrochersEmail author
Article

Abstract

The idea that properly designed environmental regulations can improve a firm’s competitiveness while simultaneously contributing to a cleaner environment through the development of so-called ‘win-win’ innovations (i.e., that reduce environmental damage while simultaneously increasing profits) is usually credited to Porter (1991). Numerous studies have since attempted to assess the validity of the concept, with mixed results. This paper contributes to this debate by surveying a nearly forgotten body of literature written in the late nineteenth and early twentieth century that discussed the impact of market incentives on the development of valuable by-products out of industrial waste. Based on the opinions held by several industrial chemists, engineers, technical journalists and economists, the development of ‘win-win’ manufacturing practices seems to have been primarily the result of the profit motive, although actual or potential legal actions based on private property rights and/or government regulations occasionally triggered this process. After reviewing some important historical writings on the latter issue, a suggestion is made that perhaps the best way to craft ‘well-designed’ environmental regulations is to return to a private property rights approach to mitigating pollution problems whenever possible.

Keywords

Porter Hypothesis By-products Private property rights Common law Win-win innovation 

JEL Classifications

L21 O18 Q53 Q55 Q56 R11 

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Copyright information

© Springer Science+Business Media B.V. 2008

Authors and Affiliations

  1. 1.Department of GeographyUniversity of Toronto MississaugaMississaugaCanada

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