4.7 Article

Productivity growth, environmental regulation and win-win opportunities: The case of chemical industry in Italy and Germany

Journal

EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 262, Issue 2, Pages 733-743

Publisher

ELSEVIER SCIENCE BV
DOI: 10.1016/j.ejor.2017.03.058

Keywords

Data envelopment analysis; Environmental and technical efficiency; Porter's hypothesis; Undesirable outputs; Productivity growth indexes

Funding

  1. Piedmont Region through the project ICT Converging on Law: Next Generation Services for Citizens, Enterprises, Public Administration and Policymakers related to the announcement Converging Technologies

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This paper analyzes the environmental and economic efficiency of a sample of firms located in Italy and Germany, operating in the chemical sector and included in the European Pollution Release and Transfer Register (E-PRTR). The Directional Distance Function (DDF) approach in a conditional setting has been applied to obtain efficiency score and Total Factor Productivity (TFP) growth indexes considering pollution in computations. Emissions increase in absolute term between 2004 and 2007, with a worse performance of Italian firms, but efficiency indicators show a reduction of inefficiency over time, with similar performance of firms from the two countries. The formal test for the Porter's hypothesis suggests that chemical firms suffering higher compliance costs in the first period react with investment increasing productivity in the following years. The empirical evidence, robust to different specifications and estimation methods, supports the presence of win-win opportunities. (C) 2017 Elsevier B.V. All rights reserved.

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