Environmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital

A. Xepapadeas, A.J. de Zeeuw

Research output: Working paperDiscussion paperOther research output

364 Downloads (Pure)


The Porter hypothesis suggests a double dividend in the sense that environmental policy improves both environment and competitiveness. The suggestion received strong criticism from economists mainly driven by the idea that if opportunities for higher competitiveness exist firms do not have to be triggered by an extra cost. Therefore, the trade-off for the government between environmental and other targets remains. In this paper a model is developed which confirms the last point but which also draws the attention to some general mechanisms that relax the trade-off considerably. Downsizing and especially modernization of firms subject to environmental policy will increase average productivity and will have positive effects on the marginal decrease of profits and environmental damage. Concluding, a double dividend can generally not be expected but the trade-off is not so grim as is often suggested.
Original languageEnglish
Place of PublicationTilburg
Number of pages24
Publication statusPublished - 1998

Publication series

NameCentER Discussion Paper


  • environmental policy
  • competitiveness
  • Porter hypothesis
  • capital


Dive into the research topics of 'Environmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital'. Together they form a unique fingerprint.

Cite this