College

Buchtel College of Arts and Sciences (BCAS)

Date of Last Revision

2020-05-08 06:02:01

Major

Economics

Honors Course

3250:497

Number of Credits

3

Degree Name

Bachelor of Arts

Date of Expected Graduation

Spring 2020

Abstract

This paper examines whether there is evidence to support or refute the Porter Hypothesis on a high polluting industry through analyzing the effect of environmental stringency on innovation in the chemical industry. Taking data from the Organization for Economic Cooperation and Development (OECD), we use country-level data from 2003-2015, to analyze how a country’s number of Class C chemical patents is affected by their Environmental Policy Stringency (EPS) Index. Using a fixed effect model, we controlled for differences in GDP, exports, investment in research and development, market competitiveness and participation in the industry. The initial results of this regression found that as a country’s EPS Index changes by one unit, we would expect a decrease in about 45 patents in a year at the 99 percent significance level. These findings support our hypothesis that there is evidence against the strong form of the Porter Hypothesis.

This suggests policies aimed at reaching environmental goals may need to create flexibility to stimulate innovation. This could be through creating more opportunities for innovation through government funded grants or creating incentives for private investment in research and development. However, this research could be enhanced by more country observations and industry level data.

Research Sponsor

Dr. Francesco Renna

First Reader

Dr. Sucharita Ghosh

Second Reader

Dr. Elizabeth Erickson

Honors Faculty Advisor

Dr. Elizabeth Erickson

MaciWoyat_Signature Sheet.doc (59 kB)
Signature Sheet

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