When does the Porter Hypothesis hold? Empirics on cost and quality for regulatory-induced redesigns
Do regulations drive innovation?
In the 1990s, economist Michael Porter challenged the idea that strict environmental regulations constrain competitiveness and growth. The Porter Hypothesis suggests the opposite: that soundly designed rules can actually spur companies to invent new technologies and ultimately enhance competitiveness.
Research Question: When does the Porter Hypothesis hold?
Research Task: Derive under what conditions regulation can be expected to prompt “win-wins” in product redesign, vis-à-vis product cost and non-regulated product quality attributes.
Background: Although there is considerable empirical evidence supporting the contention that regulation-induced innovation often results in win wins for firms and consumers, there is a strong counter-vailing belief that regulation should lead to increased costs and reduced quality in product attributes that aren’t regulated. This project asks under what circumstances each of these contentions might be expected to be correct.
Task Overview: Assemble different types of innovation-related data on an energy-using residential appliance (clothes washers) and explore patterns related to energy efficiency policy and innovation. These data are: patent data (inventive activity with a commercial purpose); manuals (innovative activity as embedded in commercial products); and Consumer Reportsmagazine data (the outcomes of innovation as they relate to the price and quality attributes of CR “tested and equivalent” commercial products).
Research Team: Margaret Taylor (PI), Carolyn Fischer, Sydny Fujita, David Jacobowitz, Sarah Price, Nadia Vriend, Hung-Chia Yang, & Jingjing Zhang
Funding Information: LDRD 2018, Advancing Clean Energy Innovation Decision Science: Activity 2
More: LDRD 2018 – Activity 2