Is environmental regulation bad for competition? A survey

Theoretical and empirical research points to environmental regulation affecting the vigour of competition in product markets. We provide a critical, selective survey of that research. Environmental regulations can advantage large firms over small and raise concentration. They can discourage entry in their own right, and provide instruments with which incumbents can discourage entry strategically. They can provide the basis for predatory behavior by incumbents. Policy governance needs to be coordinated sufficiently to ensure that these secondary effects are accounted for in policy design. Cost-benefit evaluation of environmental policies that fail to account for likely detrimental impacts on product market competition will overstate the net benefits. This survey is a heavily-revised version of a discussion paper that the author wrote for presentation to a meeting of the OECD Competition Committee in June 2006 (OECD 2006). The support of OECD in the writing of that paper is gratefully acknowledged. Thanks also to Nick Johnstone, Jean-Phillipe Barde, Jeremy West, Sandeep Kapur, Michael Crew and an anonymous referee from this journal for helpful comments on earlier versions. All views expressed are those of the author alone.     

A research of material input and environmental impact for Chinese economy： 1990-2005

The process of economic activities is on the basis of tremendous material inputs. China has been discharging an enormous amount of waste, giving rise to a wide range of environmental impacts. The method of economy-wide material flow analysis （EW-MFA） is one of the effective tools to examine the flow of materials entering physical economies, and recognize early environmental problems. Relevant researches are still at the early stage in China and most focus on material throughput but are rarely concerned about the utilization of recycling resource and environmental impact. Based on more than 3,000 items of data related, materials entering Chinese economy are classified into three types, and then the characteristics of material input and environmental impact are presented for the years 1990-2005 by using the indicators derived from EW-MFA. The Ratio of Recycled Material （RRM） is added as the new indicator in order to be in accordance with the need of circular economy being promoted in China. Results show that the great changes in the structure of material input cause the continuous increase of industrial solid waste emissions and the bogging down of material productivity. The RRM reveals that the utilization of recycling resources remains at a fairly low level in China. Finally, some weakness of EW-MFA is discussed according to the calculated results.     

On division management for environmental system of China： lessons from European local sustainable development

The concept of sustainable development, after being brousht forward, has become a shibboleth in the world, at national and local levels. In Europe, this concept is implemented from the local to tha nation, even to the Continent. The local sustainable development mainly consists in two factors： one is the renovating method continually invented by European Secretariot of ICLEI, and the other is that the local authorities towards sustainability are co-operated by the European Sustainable Cities and Towns Campaign. The coo-budget method is the outcome of tbese factors, For our country is a big country, on rapid progression of indastrialization and urbanization, with a large population and scarce resoarces per capita, it is practically significance to study us soon as possible the methodology. Experience from European local sustainable development may help us to resolve the handicap of departraent division in local a, tbority.     

Clean technology — Innovation and environmental regulation

The development and diffusion of clean technologies has an important role to play in preventing pollution. Government must address the issue of how firms can be given the necessary incentive to develop environmentally sound production techniques and products. This paper focus on how subsidies can — under certain restrictive conditions — stimulate innovation. Subsidization is usually assumed to involve unit subsidies for pollution reduction. Unit subsidies have little to do with the subsidy schemes in actual use. Our focus is on subsidy schemes specifically designed to promote the development of clean technologies through the use of grants/financial aid. Based on data from the development projects initiated through The Danish Clean Technology Programme we analyze how environmental innovations take place when the polluters, their suppliers and consultants are actively engaged in the development processes. The main merit of subsidy schemes like the Danish one is its direct focus on the innovation processes and the active incorporation of the network of firms surrounding the polluters. Our findings lead us to conclude that when it comes to subsidization, the role of government should be redefined. Government can act as a matchmaker by providing firms with informative incentives and necessary contacts for finding more efficient technological solutions to specific environmental problems.     

How predictable are environmental compliance inspections?

The goal of this paper is to examine the timing of environmental compliance inspections and determine the extent to which such inspections can be predicted. The paper focuses on modeling the inspections at hazardous waste facilities in the U.S. using detailed data on individual inspections and facilities. The paper uses a number of parametric and semi-parametric duration models to predict the timing of inspections and finds that the exponential model provides the best balance in terms of the explanatory power and simplicity of the model. However, even with this model it is difficult to accurately predict the timing of most compliance inspections. The paper also examines the extent to which using data on individual inspections can improve empirical predictions about aggregate inspections. If the goal is to estimate the annual number of inspections at hazardous waste facilities, neither the exponential model or a Poisson model is clearly superior. Which model is more appropriate depends on the question the researcher wants to answer. Similarly, if the focus is on whether any inspection occurred in a given time period, the benefits of using the exponential model depend on the nature of the questions to be answered. While the exponential model performs better than a probit model in predicting which entities will be inspected, it also results in a higher number of “false positives,” that is predicting an inspection when no inspection actually occurs.     

When do firms support environmental agreements?

Several firms have recently supported their countries’ participation in international environmental agreements where countries commit to stricter environmental regulation. This paper analyzes the rationale of this conduct by examining equilibrium emission standards with and without environmental treaties. We identify that more stringent environmental regulation produces two effects on firm profits: a negative effect due to larger abatement costs, and a positive effect that arises from the amelioration of duopoly overproduction. We describe under which conditions the positive effect dominates the negative effect, increasing firm profits, and inducing them to support their countries’ participation in environmental treaties.     

Green technical innovation, environmental expenditure, and the environmental Kuznets curve： a dynamic s model

The relationship between the emission of pollutant and economic growth has attracted a lot of attention in the environmental debate of the recent decades. Based on some theoretical and empirical research on environmental Kuznets curve （EKC）, this paper introduces the environmental technical innovation and environmental investment into Salow growth model to discuss the relationship between GDP per capital and the emission of pollutant By the dynamic simulation and parameters analysis, the results of the model indicate： （1） when ＂green＂ technical progress and environmental investment are fixed, the relationship between GDP per capital and the emission shows the linear relationship; （2） ＂green＂ technical progress can lead to the positive growth rates with a decreasing level of emission, which is compatible with an EKC; （3） the proportion of the environmental investment can lead the different growth rates and level of emission. These results can explain that developing countries are ＂too poor to be green＂.     

SWEEA—Swedish environmental and economic accounts

As part of the Swedish effort at integrating economic and environmental issues, Statistics Sweden has developed a system of physical environmental accounts. The system is based on the concept of satellite accounts which supplement the traditional national accounts. Here, Statistics Sweden focuses on the chain linking natural resources to economic activities and emissions. Current projects include the use of energy and the emission of pollutants, statistics on waste generation and recycling, and accounts for phosphorus and nitrogen flows. Attention is also paid to improvements of data on expenditures on environmental protection.     

Material and energy flow accounting in Germany—Data base for applying the national accounting matrix including environmental accounts concept

In this paper, we discuss the background of German Environmental Economic Accounting (GEEA). One of the elements of GEEA is material and energy flow analysis. The corresponding accounts are presented in the Material and Energy Flow Information System (MEFIS). This data base can be used for many purposes including application in the National Accounting Matrix including Environmental Accounts (NAMEA). The data availability for analyzing particular environmental burdens is described. Specific indicators for greenhouse effect and acidification are presented in the form of charts and tables.     

Does free trade promote environmental technology transfer?

We investigate how environmental and trade policies affect the transfer of environmental technology in a two-country model with global pollution. By comparing free trade and tariff policy with or without commitment, the following results are obtained. First, firms avoid the implementation of environmental tax by contracting technological transfer. Second, there is a case in which free trade is preferable to a tariff policy for both countries when there is no commitment to a tariff level. Third, free trade is not Pareto-preferred to a tariff policy when there is a commitment.     

Is the environmental performance of industrialized countries converging? A ‘SURE’ approach to testing for convergence

In this paper, we test for convergence in the environmental performance of a sample of OECD countries, with data ranging from 1971 to 2002. First, we use Data Envelopment Analysis (DEA) to compute two environmental performance indicators (EPIs) in the production theory framework. Second, we propose the use of a sequential multivariate approach to test for convergence in environmental performance. These tests allow us to reconcile the time series literature with the cross-sectional dimension, which is basic when testing for convergence in regional blocs. The SURE technique is used, which allows for the existence of correlations across the series without imposing a common speed of mean reversion. The empirical results show that the group of countries as a whole, as well as the majority of countries considered on an individual basis (results for some countries vary between EPIs), are catching-up with Switzerland (the benchmark country).     

Empirical research on drive mechanism of firms'''' environmental management

Firms’transformation from passive envrionmental management to active environmental management is thekey to solving environmental problems. This paper empirically studies the impact of environmental management incen-tives on environmental management through model construction. Based on the data and reality of China, we can build aconcept model of environmental management driving mechanism, and put forward theoretical hypothesis that can betested: take the 13 environmental management behaviors (EMBs) as substitute of the comprehensiveness, introducecounting variables, and use NB model, Possion Model and Ordered Probit model the regression analysis. The theory andmethods brought forward in this paper will provide references for firms in China to further implement voluntaryenvironmental management, and offer advises and countermeasures for leaders to implement environmental manage-ment effectively.     

Emergy evaluation of the artificial forest ecosystems in the watershed of Miyun Reservoir：a case study for ecosystems valuation and environmental management

To build the artificial forest ecosystem is the major eco-economic development model in the watershed of Miyun Reservoir. It is very important to evaluate the benefits of those ecosystems. Emergy theories are very helpful for us to establish a science-based assessment framework. Emergy evaluation of the artificial forest ecosystems in the watershed of Miyun Reservoir is used to asses the relative values of several ecological functions （sometimes called ecosystem services） and main ecosystem storages （sometimes called natural capital）. The main driving energies, internal processes and storages are evaluated. The main functions, including transpiration, GPP and infiltration, are evaluated, which are 609em$/ha/yr, 6,245em$/ha/yr and 340em$/ha/yr respectively. The total values of major environmental services are 4,683em$/ha/yr in the artificial forest ecosystem. The main storages of natural capital including live biomass, soil moisture, organic matter, underground water and landform are estimated, which are 112,028em$/ha, 9em$/ha, 40,718em$/ha, 34em$/ha and 6,400,514em$/ha respectively. The largest value is landform, which accounts for 97.7% of these calculated total emdollar values. The concept of replacement value is explored using the emergy values of both ecosystem services and natural capital. The total calculated replacement values are 302,160em$/ha.     

Strategic thinking on improving the environmental competitiveness of Chinese enterprises

Environmental competitiveness, price competitiveness and non-price competitiveness make up the undivided vital part of product＇s competitiveness. Environmental competitiveness can not only help improve the enterprise＇s key competitiveness directly, but also strengthen it indirectly by improving the products＇ price competitiveness and non-price competitiveness effectively. Instead of being confined to the product itself, there are several element＇s that can determine and influence the product＇s environmental competitiveness, including the manufacturing process, the management of enterprise＆the life circle of the products, etc. Measuring these elements by setting “environmental suitable degree ”, and building up the echelon model to evaluate the environmental competitiveness can help us see about the standard of the enterprises＇ environmental competitiveness. Though many of the national enterprises have price competitiveness to some extend, restricted by all kinds of elements like systems, techniques, policy, the enterprises are weak in environmental competitiveness. Beginning with systems redesign, carrying out the sustainable development, strengthening inner enterprises management, making more efforts on technique innovation, and widely publicizing and teaching the ecological concept, Chinese national enterprises can improve their environmental competitiveness and improve their key competitiveness.     

Empirical research on drive mechanism of firms＇ environmental management

Firms＇transformation from passive envrionmental management to active environmental management is thekey to solving environmental problems. This paper empirically studies the impact of environmental management incen-tives on environmental management through model construction. Based on the data and reality of China, we can build aconcept model of environmental management driving mechanism, and put forward theoretical hypothesis that can betested： take the 13 environmental management behaviors （EMBs） as substitute of the comprehensiveness, introducecounting variables, and use NB model, Possion Model and Ordered Probit model the regression analysis. The theory andmethods brought forward in this paper will provide references for firms in China to further implement voluntaryenvironmental management, and offer advises and countermeasures for leaders to implement environmental manage-ment effectively.     

Legal regulation of enterprises＇ environmental impact：a survey

The enterprise coordinates social resources, which changes the dialogue between human and the environment into that between enterprise and environment. The profit-making character of enterprise leads to the abandonment of environmental ethics. Enterprise, which has the capability to solve environmental problems, however, lacks the motive to do it. It has controlling power over society and should assume the responsibility of environmental protection. For its lack of environmental conscience, the external institutional arrangements should be made for enterprise. The strategy for environmental cost should be designed in connection with the interest orientation of enterprise. And various legal measures in constitutional law, social law, civil law, administrative law and criminal lave should be utilized to regulate enterprise＇s behaviors regarding environmental protection.     

Input–output theory and institutional aspects of environmental policy

National accounting over the years has developed in close interaction with input–output analysis. However, present developments involving core and satellite accounts seem to suggest that this relation will become less close, with possible negative consequences for analysis and policy. In this paper we show that also in the new frameworks the input–output (I–O) table will most likely retain its central place. To illustrate this, we discuss the problem of the choice of policy background principles in environmental pollution abatement. We show that in the case of physical accounts of the NAMEA-type the question of the origin of environmental pollution can be addressed in a novel way. This suggests alternative definitions of the concept of ‘a polluter’, and new rules for the allocation of social cost.     

Do environmental regulations influence the competitiveness of pollution-intensive products?

According to “Pollution Haven Effect”, in order to circumvent stringent environment standards, polluting industries in developed countries will be chosen to locate into developing countries; another way is that developed countries increase imports of pollution-intensive products instead of producing by their own, both of which can contribute to the changes of comparative advantages in the past 30 years. Since 1990s, many scholars have paid special attention on whether environmental regulations affect the trade patterns or not, but the conclusions are ambiguous. This paper, based on the Heckscher-Ohlin-Vanek (HOV) model and using 95 and 42 countries sample data in year of 2005, is an empirical analysis which shows that: (1) according to the estimated results based on the “environmental governance” index calculated by CIESIN, environmental regulations do not change the comparative advantages of five types of pollutionintensive goods; (2) On the other hand, when the per capita income is considered as an endogenous indicator of environmental regulation, environmental regulation will significantly promote the comparative advantages in chemical products, iron and steel products and paper products, though environmental regulations do not take any influence on non-metallic minerals products and non-ferrous metals products. I think that appropriate level of environmental regulation can promote a comparative advantage in pollution-intensive goods.     

Do increases in energy efficiency improve environmental quality and sustainability?

Governments world-wide increasingly see energy efficiency as an important aspect of sustainability. However, there is a debate in the literature as to whether the impact of improved energy efficiency on reducing energy use might be partially, or more than wholly, offset through “rebound” and “backfire” effects. This paper clarifies the theoretical conditions under which such effects would occur and explores their likely significance using a computable general equilibrium (CGE) model of the Scottish economy. We find that for Scotland a general improvement in energy efficiency in the production sectors of the economy initially produces rebound effects that eventually grow into backfire. Energy use ultimately increases in response to an efficiency gain and the ratio of GDP to CO₂ emissions falls. The economic factors underpinning rebound effects are straightforward: energy efficiency improvements result in an effective cut in energy prices, which produces output, substitution, competitiveness and income effects that stimulate energy demands. However, the presence of strong rebound or even backfire does not mean that efficiency-enhancing policies are irrelevant: rather it suggests that such policies operating alone are insufficient to generate environmental improvements. The implication is that a co-ordinated portfolio of energy policies is required.