Firms' and States' Responses to Laxer Environmental Standards

Cordella, Tito ; Devarajan, Shantayanan

World Bank, Washington, DC

关键词: ENVIRONMENTAL POLICY;    TECHNOLOGY ADOPTION;    PARIS AGREEMENT;    SUBNATIONAL REGULATION;    POLICY REVERSAL;   

DOI  :  10.1596/1813-9450-8781
RP-ID  :  WPS8781

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

On June 1, 2017, President Trumpannounced the United States' withdrawal from the Parisagreement on climate change. Despite this decision, Americanfirms continued investing in low-carbon technologies andsome states committed to tougher environmental standards. Tounderstand this apparent paradox, this paper studies how aweakening of environmental standards affects the behavior ofprofit-maximizing firms. It finds that a relaxation ofemission standards (i) may increase firms' incentivesto adopt clean technologies, but not to pollute less; (ii)may negatively affect industry profitability if it isperceived as temporary; and, when this is the case, (iii)the unilateral adoption of stricter standards by largestates may increase the expected profitability of every firm.