Firms' and States' Responses to Laxer Environmental Standards

On June 1, 2017, President Trump announced the United States' withdrawal from the Paris agreement on climate change. Despite this decision, American firms continued investing in low-carbon technologies and some states committed to tougher envi...

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Main Authors:	Cordella, Tito, Devarajan, Shantayanan
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	ENVIRONMENTAL POLICY TECHNOLOGY ADOPTION PARIS AGREEMENT SUBNATIONAL REGULATION POLICY REVERSAL CLIMATE CHANGE POLICY EMISSION STANDARDS CLEAN TECHNOLOGY
Online Access:	http://documents.worldbank.org/curated/en/156271552566218095/Firms-and-States-Responses-to-Laxer-Environmental-Standards http://hdl.handle.net/10986/31407

id	okr-10986-31407
recordtype	oai_dc
spelling	okr-10986-314072022-09-19T12:16:22Z Firms' and States' Responses to Laxer Environmental Standards Cordella, Tito Devarajan, Shantayanan ENVIRONMENTAL POLICY TECHNOLOGY ADOPTION PARIS AGREEMENT SUBNATIONAL REGULATION POLICY REVERSAL CLIMATE CHANGE POLICY EMISSION STANDARDS CLEAN TECHNOLOGY On June 1, 2017, President Trump announced the United States' withdrawal from the Paris agreement on climate change. Despite this decision, American firms continued investing in low-carbon technologies and some states committed to tougher environmental standards. To understand this apparent paradox, this paper studies how a weakening of environmental standards affects the behavior of profit-maximizing firms. It finds that a relaxation of emission standards (i) may increase firms' incentives to adopt clean technologies, but not to pollute less; (ii) may negatively affect industry profitability if it is perceived as temporary; and, when this is the case, (iii) the unilateral adoption of stricter standards by large states may increase the expected profitability of every firm. 2019-03-14T21:23:20Z 2019-03-14T21:23:20Z 2019-03 Working Paper http://documents.worldbank.org/curated/en/156271552566218095/Firms-and-States-Responses-to-Laxer-Environmental-Standards http://hdl.handle.net/10986/31407 English Policy Research Working Paper;No. 8781 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ENVIRONMENTAL POLICY TECHNOLOGY ADOPTION PARIS AGREEMENT SUBNATIONAL REGULATION POLICY REVERSAL CLIMATE CHANGE POLICY EMISSION STANDARDS CLEAN TECHNOLOGY
spellingShingle	ENVIRONMENTAL POLICY TECHNOLOGY ADOPTION PARIS AGREEMENT SUBNATIONAL REGULATION POLICY REVERSAL CLIMATE CHANGE POLICY EMISSION STANDARDS CLEAN TECHNOLOGY Cordella, Tito Devarajan, Shantayanan Firms' and States' Responses to Laxer Environmental Standards
relation	Policy Research Working Paper;No. 8781
description	On June 1, 2017, President Trump announced the United States' withdrawal from the Paris agreement on climate change. Despite this decision, American firms continued investing in low-carbon technologies and some states committed to tougher environmental standards. To understand this apparent paradox, this paper studies how a weakening of environmental standards affects the behavior of profit-maximizing firms. It finds that a relaxation of emission standards (i) may increase firms' incentives to adopt clean technologies, but not to pollute less; (ii) may negatively affect industry profitability if it is perceived as temporary; and, when this is the case, (iii) the unilateral adoption of stricter standards by large states may increase the expected profitability of every firm.
format	Working Paper
author	Cordella, Tito Devarajan, Shantayanan
author_facet	Cordella, Tito Devarajan, Shantayanan
author_sort	Cordella, Tito
title	Firms' and States' Responses to Laxer Environmental Standards
title_short	Firms' and States' Responses to Laxer Environmental Standards
title_full	Firms' and States' Responses to Laxer Environmental Standards
title_fullStr	Firms' and States' Responses to Laxer Environmental Standards
title_full_unstemmed	Firms' and States' Responses to Laxer Environmental Standards
title_sort	firms' and states' responses to laxer environmental standards
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/156271552566218095/Firms-and-States-Responses-to-Laxer-Environmental-Standards http://hdl.handle.net/10986/31407
_version_	1764474259487326208

Firms' and States' Responses to Laxer Environmental Standards

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