The impact of environmental regulation on competitiveness in the German manufacturing industry - a comparison with other countries of the European Union

This article examines, through three case studies, whether German industrial plants suffer from a negative impact on competitiveness caused by stringent environmental legislation. A micro-level analysis showed that abatement initiatives had, in general, been implemented without economic damage and did not touch on the core business. Moreover, German sample plants ranked environmental pressure as relatively unimportant compared with other competitive pressures. Finally, the low absolute levels of compliance costs, at least in two of the case studies, explained why environmental regulations cannot have a great influence on competitiveness in the chosen sectors. High productivity levels were not among the essential factors explaining our findings. It implies for our case studies that also plants with lower productivity can withstand high compliance costs. (C) 2004 Elsevier Ltd. All rights reserved.