environmental regulation and u s economic growth in this article we quantify the costs of pollution controls by reporting the results of simulations of the growth of the u s economy with and without regulation for this purpose we have constructed a detailed model of the economy that includes the determinants of long term growth we have also analyzed the interaction between industries in order to capture the full repercussions of environmental regulations however we have not attempted to assess the benefits resulting from a cleaner environment we find that pollution abatement has emerged as a major claimant on the resources of the u s economy the cost of emission controls is more than 10 of the total cost of government purchases of goods and services

investment horizon risk and compensation in the banking industry this paper examines the relation between the investment horizon of banks and their ceo compensation and its consequences for risk and performance we find that banks with short term investment intensity pay more cash bonus exhibit higher risk and perform more poorly than banks with longer term investment intensity this evidence is broadly consistent with the view that short term means of compensation encouraged a short term investment focus which in turn led to both higher risk and resulted in poorer performance culminating in the sub prime crisis the inverse risk performance relation suggests pay schemes were incongruent with shareholders interest moreover pay arrangements used in banks prior to the subprime crisis exposed banks to the ex post settling up problem the clawback problem

technical change external economies and the porter hypothesis abstract michael porter introduces the idea that environmental regulations may benefit affected firms this paper derives results consistent with porter s hypothesis by employing a general equilibrium framework with a large number of agents external economies of scale in production and discrete changes in technology the model shows that endogenous technical change makes porter s hypothesis feasible however a policy that produces results consistent with porter s hypothesis is not necessarily optimal

racing to the bottom and racing to the top the crucial role of firm characteristics in foreign direct investment choices this study builds on the pollution haven and induced innovation arguments as explanations for firm behavior with regard to international environmental management and argues both need to be integrated this implies that foreign direct investment is capable of facilitating a race to the bottom and a race to the top simultaneously using novel and detailed data we test whether environmental capabilities and weaknesses and other characteristics affect us firms foreign direct investment choices in chinese provinces with more or less stringent environmental regulation this enables a more detailed analysis by allowing country regulation to vary spatially and over time our study finds that heterogeneity in capabilities and firm size jointly determine foreign direct investment and in doing so shows the simultaneity of a race to the bottom and to the top specifically firms with environmental capabilities invest in more stringently regulated regions and firms with weaknesses are less likely to target such regions these diverging effects are both moderated by firm size which further amplifies each of them our findings underscore the need to integrate pollution haven and induced innovation arguments in a joint analysis they furthermore show the relevance of methodological choices when testing hypotheses integrating the above arguments empirically

executive compensation strategic competition and relative performance evaluation theory and evidence we examine compensation contracts for managers in imperfectly competitive product markets we show that strategic interactions among firms can explain the lack of relative performance based incentives in which compensation decreases with rival firm performance the need to soften product market competition generates an optimal compensation contract that places a positive weight on both own and rival performance firms in more competitive industries place greater weight on rival firm performance relative to own firm performance we find empirical evidence of a positive sensitivity of compensation to rival firm performance that is increasing in the degree of competition in the industry

taxing variable cost environmental regulation as industrial policy abstract conventional wisdom has it that a country that enacts strict environmental regulations will place its firms at a competitive disadvantage this view has been challenged recently some commentators argue that stricter regulation will enhance domestic competitiveness strict regulations induce innovation we evaluate this argument in a strategic trade model in very special cases a strengthening of regulation may result in a shift of profits from foreign to domestic firms this is not a general result however environmental regulation should of course be imposed to control externalities but it is unlikely that it will serve to generate industrial advantage

ceo compensation and bank efficiency an application of conditional nonparametric frontiers the paper investigates in a dynamic context the effect of chief executive officer ceo bonus and salary payments on banks technical efficiency levels our methodological framework incorporates the latest developments on the probabilistic approach of efficiency measurement as introduced by b din et al 2012 we apply time dependent conditional efficiency estimates to analyse a sample of 37 us banks for the period from 2003 to 2012 the empirical evidence reveals a non linear relationship between ceo bonus and salary payments and banks efficiency levels more specifically it is reported that salary and bonus payments affect differently banks technological change and technological catch up levels finally the empirical evidence suggests that higher salary and bonus payments are not always aligned with higher technical efficiency levels

equilibrium pollution taxes in open economies with imperfect competition abstract this paper argues that imperfect competition in global markets creates a strategic interaction between governments that can lead to the inefficient distortion of pollution taxes this distortion can be decomposed into a rent capture effect and a pollution shifting effect the rent capture effect lowers equilibrium taxes as each country attempts to gain a competitive advantage over its trading partner and thereby capture foreign rent through net exports the pollution shifting effect raises equilibrium taxes as each country attempts to transfer production and its associated pollution to the other country this effect vanishes if pollution is perfectly transboundary because shifted pollution causes as much damage to the domestic environment as does domestic pollution the net effect on symmetric equilibrium taxes is negative except in the special case of perfect competition with no transboundary pollution in this case the two effects are mutually offsetting and the nash equilibrium is efficient when pollution is at least partially transboundary there also arises the usual transboundary externality and this reinforces the negative net strategic effect giving rise to equilibrium taxes that are lower than what is globally efficient

social cost of environmental quality regulations a general equilibrium analysis the use of cost benefit analysis by federal regulatory agencies has expanded greatly in scope and sophistication unfortunately agencies continue to employ private cost rather than social cost to evaluate environmental quality regulations furthermore general equilibrium impacts and intertemporal effects of regulations are typically not included in the evaluation in this paper we estimate the social cost of environmental quality regulations mandated by the clean air and clean water acts we construct an econometric general equilibrium model of the united states to demonstrate that social cost estimates diverge sharply from private cost estimates we also demonstrate that general equilibrium impacts are significant and pervasive and that intertemporal effects of the regulations heretofore ignored are significant

the effect of clean water regulation on profitability testing the porter hypothesis previous theoretical research provides opposing arguments regarding the effect of environmental regulation on profitability this study provides empirical evidence on this debated effect by testing the strong version of the porter hypothesis we employ panel data analysis to examine the effect of water regulation as measured by permitted wastewater discharge limits on the profitability of publicly held firms operating within the chemical manufacturing industries we find that tighter water regulation meaningfully lowers profitability by reinterpreting profitability in terms of sales and costs the results demonstrate that tighter water regulation increases costs conditioned on a given level of sales

bank ceo pay performance relations and the effects of deregulation the authors test the deregulation hypothesis that posits that bank ceo compensation became more sensitive to performance as bank management became less regulated they observe a significant increase in pay performance sensitivities from their 1976 81 regulation subsample to their 1982 88 deregulation subsample these increases in pay sensitivities after deregulation are observed for salary and bonus stock options and common stock holdings the authors observe increases in the pay performance relation associated with high capitalization ratio banks consistent with providing incentives for wealth creation while even larger increases in pay performance sensitivity for lower capitalization ratio banks suggest an federal deposit insurance corporation moral hazard problem copyright 1995 by university of chicago press

firm incentives to promote technological change in pollution control reply abstract the process of technological change in pollution control is broken into three basic steps innovation diffusion and optimal agency response firm incentives to promote these steps are then examined under five regulatory regimes direct controls emission subsidies emission taxes free marketable permits and auctioned marketable permits on a relative basis emission taxes and auctioned permits provide the highest firm incentives to promote technological change at times free permits generate lower incentives direct controls which are common regulatory tools usually provide the lowest relative firm incentives to promote technological change

did the invisible hand need a regulatory glove to develop a green thumb some historical perspective on market incentives win win innovations and the porter hypothesis the idea that properly designed environmental regulations can improve a firm s competitiveness while simultaneously contributing to a cleaner environment through the development of so called win win innovations i e that reduce environmental damage while simultaneously increasing profits is usually credited to porter 1991 numerous studies have since attempted to assess the validity of the concept with mixed results this paper contributes to this debate by surveying a nearly forgotten body of literature written in the late nineteenth and early twentieth century that discussed the impact of market incentives on the development of valuable by products out of industrial waste based on the opinions held by several industrial chemists engineers technical journalists and economists the development of win win manufacturing practices seems to have been primarily the result of the profit motive although actual or potential legal actions based on private property rights and or government regulations occasionally triggered this process after reviewing some important historical writings on the latter issue a suggestion is made that perhaps the best way to craft well designed environmental regulations is to return to a private property rights approach to mitigating pollution problems whenever possible

how green management influences product innovation in china the role of institutional benefits does being green facilitate product innovation this study examines whether green management in firms operating in china fosters radical product innovation to a greater extent than it does incremental product innovation and investigates the underlying institutional mechanisms involved in the relationship between green management and product innovation the findings show that green management is more likely to lead to radical product innovation than to incremental product innovation moreover government support as a formal institutional benefit more strongly mediates the effect of green management on radical product innovation than its effect on incremental product innovation whereas social legitimacy as an informal institutional benefit more strongly mediates the effect of green management on incremental product innovation than its effect on radical product innovation these findings provide important implications for explaining how firms employ green management to facilitate product innovation 2014 springer science business media dordrecht

foreign bank diversification and efficiency prior to and during the financial crisis does one business model fit all diversified and focused business models may affect foreign bank efficiency differently we investigate whether there is an optimal business model along three business dimensions assets funding and income and which business model is optimal for foreign banks in a financial center we apply recently developed non parametric methods with bootstrap to estimate group efficiency to test for differences across groups and finally to analyze the link between bank efficiency and diversification measures using luxembourg bank data that include the financial crisis we find that there is no unique business model the most efficient business model appears to be a focused asset funding and income strategy banks organizational forms play a role branches may be preferable to subsidiaries prior to the financial crisis whereas bank subsidiaries perform better than branches during the financial crisis however branches diversified in assets funding and income exploit efficiency advantages during the financial crisis

beyond the question does it pay to be green how much green and when abstract this research investigates the relationship between green management and performance in italian firms the analysis compares innovation and productivity of firms with similar features but different environmental activities firms are matched on a rich set of covariates extending the coarsened exact matching to survey data matched data are analysed with parametric and non parametric tests and endogenous treatment regression the analysis shows that the relationship between green management and performance is u shaped green firms are performing no better than firms with no environmental activity especially in energy intensive sectors among green firms more advanced environmental management is associated with higher performance overall the results suggest that green management has strong sectoral patterns and no linear relationship with performance findings suggest that green managers should pursue a comprehensive environmental management system sectoral specific policies to promote environmentally friendly activities are needed when green activities are not paying off

the efficiency paradox bureaucratic and organizational barriers to profitable energy saving investments abstract the paradox of why profitable energy saving investments are not undertaken continues to provoke debate the underlying phenomenon might be called the efficiency paradox because it represents a case in which business firms which are often presumed or taken axiomatically to be economically efficient make decisions that do not maximize profits new data from one of the us environmental protection agency s voluntary pollution prevention programs enables this paradox to be explored statistically the data show that both the level and variation in returns to lighting upgrade investments cannot be explained by standard economic models substantial gains in energy efficiency can be achieved without sacrificing profitability both economic and organizational factors account for some of the variation in observed returns to these investments but the results suggest a need for improved and more comprehensive theories of the investment behavior of firms and other organizations

data envelopment analysis for environmental assessment comparison between public and private ownership in petroleum industry abstract environmental assessment recently becomes a major policy issue in the world this study discusses how to apply data envelopment analysis dea for environmental assessment an important feature of the dea environmental assessment is that it needs to classify outputs into desirable good and undesirable bad outputs because private and public entities often produce not only desirable outputs but also undesirable outputs as a result of their production activities this study proposes the three types of unification for dea environmental assessment by using non radial dea models the first unification considers both an increase and a decrease in the input vector along with a decrease in the direction vector of undesirable outputs this type of unification measures unified efficiency the second unification considers a decrease in an input vector along with a decrease in the vector of undesirable outputs this type of unification is referred to as natural disposability and measures unified efficiency under natural disposability the third unification considers an increase in an input vector but a decrease in the vector of undesirable outputs this type of unification is referred to as managerial disposability and measures unified efficiency under managerial disposability all the unifications increase the vector of desirable outputs to document their practical implications this study has applied the proposed approach to compare the performance of national oil firms with that of international oil firms this study identifies two important findings on the petroleum industry one of the two findings is that national oil companies under public ownership outperform international oil companies under private ownership in terms of unified operational and environmental efficiency and unified efficiency under natural disposability however the performance of international oil companies exhibits an increasing trend in unified efficiency the other finding is that national oil companies need to satisfy the environmental standard of its own country while international oil companies need to satisfy the international standard that is more restricted than the national standards as a consequence international oil companies outperform national oil companies in terms of unified efficiency under managerial disposability

adoption of green chemistry an analysis based on us patents abstract green chemistry patents are an indicator of environmental innovation and r d over 3200 green chemistry patents were granted in the us patent system between 1983 and 2001 with most assigned to the chemical sector the university and government sectors place greater emphasis on green chemistry than most industrial sectors worldwide the emphasis on green chemistry technology relative to chemical plastic rubber and polymer technologies has increased since 1988 the united states appears to have a competitive advantage in green chemistry the most rapid growth in the emphasis on us green chemistry patents coincides with revisions to major us environmental laws in the late 1980s and early 1990s however the ratio of green chemistry patents to patents in other areas of chemical sciences in heavily regulated industries are low suggesting that these industries did not necessarily embrace green chemistry as a means to reduce their regulatory burden

technical efficiency and impact of environmental regulations in farrow to finish swine production in taiwan this article demonstrates how technical efficiency and the impact of environmental regulations of taiwanese farrow to finish swine production can be estimated in the presence of undesirable outputs the issue of measuring technical efficiencies while considering undesirable outputs has been addressed by past studies but the proper method of including undesirable outputs has always been a subject of debate this article develops a data envelopment analysis dea based model that includes undesirable outputs the technologies of desirable output production and undesirable output control are considered simultaneously this allows one to transform undesirable output into desirable output whereby a traditional shephard distance function can be used to measure technical efficiencies an approach to measuring the impacts due to environmental regulations is then derived empirical results show that larger farms are more technically efficient than small sized farms but no clear conclusions can be reached for the measures of regulatory impact among farms with different sizes on average the sample farms incurred an opportunity cost due to environmental regulations equivalent to 9 8 of market value opportunity costs rise with efficiency

tightening environmental standards the benefit cost or the no cost paradigm ms ff ichael porter and claas van der linde have written a paper that is interesting and to us at least somewhat astonishing it is a defense of environmental regulation indeed an invitation to more stringent regulation that makes essentially no reference to the social benefits of such regulation this approach contrasts starkly with the methods that economists and other policy analysts have traditionally used when assessing environmental or other regulatory programs the traditional approach consists of comparing the beneficial effects of regulation with the costs that must be borne to secure these benefits for environmental regulation the social benefits include the reductions in morbidity or premature mortality that can accompany cleaner air the enhanced recreational opportunities that can result from water quality improvements the increased land values that might attend the cleanup of a hazardous waste site the enhanced vitality of aquatic ecosystems that might follow reductions in agricultural pesticide use or any of the other potentially significant benefits associated with tighter standards from this benefit cost approach emerges the standard tradeoff discussed in virtually every economics textbook porter and van der linde deny the validity of this approach to the analysis of environmental regulation claiming it to be an artifact of what they see as a static mindset in their view economists have failed to appreciate the capacity of

data envelopment analysis truncated regression and double bootstrap for panel data with application to chinese banking we investigate the impact of earning asset diversification on chinese bank efficiency from 2006 to 2011 we do this by adapting the current two stage data envelopment analysis approach to a panel data setting so that we can account for technology change over time our monte carlo experiments illustrate the advantages and disadvantages of the proposed new algorithm over the conventional approach when applied to chinese banking data the regression results reveal that increasing the asset share of other earning assets including securities and derivatives is positively associated with bank efficiency decreasing the share of nonearning assets in total assets or increasing total equity has a similar impact our results also suggest that financial reforms currently being undertaken in china including removing the regulatory requirement concerning the ratio of loans to deposits a draft amendment to the existing commercial banking law and interest rate liberalization a proposed draft amendment are likely to have a positive effect on bank efficiency in china

top executive rewards and firm performance a comparison of japan and the united states this paper studies top executive turnover and compensation and their relation to firm performance in the largest japanese and u s companies japanese executive turnover and compensation are related to earnings stock returns and to a lesser extent sales performance measures the fortunes of japanese top executives therefore are positively correlated with stock performance and current cash flows or with factors contributing to such performance the relations for the japanese executives are generally economically and statistically similar to those for their u s counterparts there is some evidence however that the fortunes of japanese executives are more sensitive to low income but less sensitive to stock returns than those of u s executives

total quality environmental management and total cost assessment an exploratory study abstract this study addresses one of the major perceived barriers to total quality environmental management tqem total cost assessment tca managers have difficulty assessing the impact of tqem programs because of the lack of appropriate measures in order for tqem investments to be given serious consideration a process is required for measuring monitoring and evaluating tqem by appropriately including all the environmental costs and savings for each investment option after reviewing the background of tqem and frameworks for capturing environmental costs an opportunity emerges for research involving the use of tqem and tca this research presented in this study develops a framework for identifying and formulating a set of cost measures associated with tqem investments the framework serves as a basis for comparing environmental cost measures used among several large us companies two major outputs yielded by this research are 1 a catalog of the various cost measures and procedures used to implement and carryout a tqem tca and 2 the tqem tca framework itself the catalog and framework will be important for later empirical assessment and modeling of tqem

technological change technological catch up and capital deepening relative contributions to growth and convergence we decompose labor productivity growth into components attributable to 1 technological change shifts in the world production frontier 2 technological catch up movements toward or away from the frontier and 3 capital accumulation movement along the frontier the world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections we analyze the evolution of the cross country distribution of labor productivity in terms of the tripartite decomposition finding that technological change is decidedly nonneutral and that both growth and bipolar international divergence are driven primarily by capital deepening jel o30 o47 d24

indian bank efficiency and productivity changes with undesirable outputs a disaggregated approach the objective of this study is to examine technical efficiency and productivity growth in the indian banking sector over the period from 2004 to 2011 we apply an innovative methodological approach introduced by chen et al 2011 and barros et al 2012 who use a weighted russell directional distance model to measure technical inefficiency we further modify and extend that model to measure tfp change with npls we find that the inefficiency levels are significantly different among the three ownership structure of banks in india foreign banks have strong market position in india and they pull the production frontier in a more efficient direction spbs and domestic private banks show considerably higher inefficiency we conclude that the restructuring policy applied in the late 1990s and early 2000s by the indian government has not had a long lasting effect

how foreign participation and market concentration impact bank spreads evidence from latin america increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors market structures in developing countries the authors analyze the impact of these factors on latin american bank spreads during the late 1990s their results suggest that foreign banks were able to charge lower spreads relative to domestic banks this was more so for de novo foreign banks than for those that entered through acquisitions the overall level of foreign bank participation seemed to influence spreads indirectly primarily through its effect on administrative costs bank concentration was positively and directly related to both higher spreads and costs

the other side of the trade off the impact of risk on executive compensation the principal agent model of executive compensation is of central importance to the modern theory of the firm and corporate governance yet the exiting empirical evidence supporting it is quite wea

environmental policy design innovation and efficiency gains in electricity generation this paper explores the relationship between environmental regulation innovation and competitiveness drawing upon a unique dataset on environmental regulations directed at combustion plants a global dataset of power plants and a global dataset of environmental patents the analysis is conducted in two stages first a nonparametric frontier analysis is implemented to estimate efficiency scores including a measure of technological innovation based on patent stocks second econometric methods are applied to analyse the role of policy stringency and policy design on efficiency our estimation sample covers thermal power plant sectors in 20 countries from 1990 to 2009 the results show that the stringency of environmental regulations is a significant determinant of productive efficiency with respect to pollutant emissions as well as fuel use however these effects turn negative once the level of stringency leaps over a certain threshold in addition the paper concludes that the positive effect of regulatory stringency can be diminished by a negative effect of regulatory differentiation with measures which are differentiated across plant size and age having negative consequences and these effects are increasing over time this finding is important given the prevalence of size and vintage differentiated policies in many countries finally it is found that integrated approaches to environmental innovation are more likely to bring about efficiency improvements than end of pipe technologies

are ceos really paid like bureaucrats a common view is that there is little correlation between firm performance and ceo pay using a new fifteen year panel data set of ceos in the largest publicly traded u s companies we document a strong relationship between firm performance and ceo compensation this relationship is generated almost entirely by changes in the value of ceo holdings of stock and stock options in addition we show that both the level of ceo compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980 largely because of increases in stock option grants

testing for efficiency catching up we used advances in data envelopment analysis dea techniques to examine efficiency scores and investigate the issue of convergence and divergence in a cross country analysis specifically we used bootstrapping techniques to examine a data set of 52 developed and developing countries we found that when using the standard dea model some of the results were not robust further we broke the sample into groups to examine club convergence we found that efficiency scores were significantly different between groups and that there was some evidence of convergence of efficiency scores within each group

environmental regulations and the problem of sustainability moving beyond market failure abstract the standard metaphor of market failure is an impediment to the crafting of environmental policy that can escape policy lock in sustainability requires a policy process that can avoid this lock in sustainability concerns the creation of dynamic human processes that can respond to indeed anticipate unanticipated feedback from biological processes

dea environmental assessment in time horizon radial approach for malmquist index measurement on petroleum companies abstract the climate change and various pollutions have been influencing our societies and economies the environmental assessment to be discussed in this study is increasingly important because it serves as an initial step toward pollution prevention corporate leaders policy makers researchers and individuals who are interested in environmental protection have been paying attention to the assessment so that they can prepare policy suggestions on the global warming and climate change as a methodology for the assessment this study proposes a use of data environment analysis dea in a time horizon most of data sets on the climate change are sampled in a time series where the performance of organizations fluctuates every moment in applying the dea environmental assessment to such a data set it is necessary for us to classify outputs into desirable e g oil production and undesirable e g co 2 emission categories because all organizations usually produce not only desirable but also undesirable outputs as a result of their economic activities to unify the two different types of outputs this study incorporates the concept of natural and managerial disposability into the computational framework of dea and extends them into a time horizon for the research purpose this study incorporates malmquist index into the proposed dea environmental assessment to examine an occurrence of a frontier shift among multiple periods the frontier shift indicates a technology progress and or managerial innovation during an observed period the index is further separated into four subcomponents in a time horizon these subcomponents are differently expressed under the natural and managerial disposability thus eight different subcomponents on the malmquist index are proposed to measure the frontier shift as an application this study uses the proposed dea approach to examine whether the frontier shift due to technology progress occurs or not in the petroleum industry from 2005 to 2009 our empirical study finds that the industry has not exhibited any major frontier shift under natural disposability but showing a considerable frontier shift under managerial disposability in other words the petroleum firms have improved their environmental performance by eco technology to reduce an amount of co 2 emission during the observed annual periods

when green isn t mean economic theory and the heuristics of the impact of environmental regulations on competitiveness and opportunity cost abstract the conventional neoclassical economic wisdom argues that the opportunity costs of environmental regulations are high with negative implications for costs and profits and by implication for growth and per capita gross domestic product gdp the minority view that environmental controls induce cost offsets that minimise such opportunity costs is marginalised by the conventional wisdom which assumes that economic agents are x efficient in production a behavioral model of the firm is presented in this paper whereby x inefficiency in production prevails even in a world of perfect product market competition that is dominated by rational economic agents in this model environmental regulations affect both the level of x efficiency and the extent of technological change and greener firms can be cost competitive and profitable however private economic agents cannot be expected to adopt green economic policy independent of regulations since in this model there need not be any economic advantage accruing to the affected firms in becoming greener

the impact of environmental performance on firm performance short term costs and long term benefits abstract we examine the intertemporal effect of environmental performance on financial performance and propose a method to assess the environmental performance in a fuller manner based on the weighting various pollutants according to their dangerousness to environment using our improved measures of environmental performance applied to the firm level data from the czech republic the results suggest that while the effect of environmental performance on financial performance is negative for environmental performance lagged by 1 year lag it becomes positive for 2 years lag as a consequence our findings indicate that porter hypothesis holds in the long run

exploring the nexus between banking sector reform and performance evidence from newly acceded eu countries abstract the aim of this study is to examine the relationship between banking sector reform and bank performance measured in terms of efficiency total factor productivity growth and net interest margin accounting for the effects through competition and bank risk taking to this end we develop an empirical model of bank performance which is consistently estimated using recent econometric techniques the model is applied to bank panel data from ten newly acceded eu countries the results indicate that both banking sector reform and competition exert a positive impact on bank efficiency while the effect of reform on total factor productivity growth is significant only toward the end of the reform process finally the effect of capital and credit risk on bank performance is in most cases negative while it seems that higher liquid assets reduce the efficiency and productivity of banks

human capital and convergence a production frontier approach using nonparametric production frontier methods we decompose labor productivity growth into components attributable to technological change shifts in the world production frontier technological catch up movements toward or away from the frontier and physical and human capital accumulation movements along the frontier we find that 1 technological change is decidedly nonneutral 2 productivity growth is driven primarily by physical and human capital accumulation 3 the increased international dispersion of productivity is explained primarily by physical capital accumulation and 4 international polarization the shift from a unimodal to a bimodal distribution is brought about primarily by efficiency changes technological catch up

a free lunch in the commons we derive conditions under which raising costs through a regulatory constraint or a fully expropriated tax can increase the profits arising from a common pool resource the basic model assumes a fixed number of identical agents with linear costs selling in a single period at an exogenous price a necessary and sufficient condition for a cost increase to be profitable is that aggregate output from the resource be locally convex in aggregate effort we also show that cost increases can be profitable even if price is endogenous agents are heterogeneous entry is costless or agents are playing a markov perfect equilibrium of a dynamic game we also discuss more general welfare implications of the result along with its relation to existing results for a cournot oligopoly

corporate performance and managerial remuneration an empirical analysis abstract economic theories of efficient compensation predict a positive relationship between executive pay and corporate performance and yet efforts to document this relationship have been largely unsuccessful in this paper we argue that previous cross sectional studies have omitted important variables which seriously bias their results using data that focus on individual executives over time we find that executive compensation is strongly positively related to corporate performance as measured by shareholder return and growth in firm sales the results are robust to the stock market performance measure utilized

efficiency gains within firms under voluntary environmental initiatives this paper focuses on efficiency gains that voluntary environmental initiatives may achieve within the firm current debate concerning the extent and significance of inefficiencies within firms is critically important to the progress of energy and environmental policies several recent lines of inquiry in microeconomics help explain the persistence of inefficiencies within firms in addition two of the most prominent new approaches in the field of business strategy resource based strategy and the capabilities perspective focus on the heterogeneity among firms and the resulting pockets of inefficiency within firms they suggest at least three generic strategies for voluntary environmental initiatives challenging outdated organizational routines creating opportunities for differentiation or complementing firms resource investment trajectories these generic approaches suggest that there is considerable scope for further experimentation with voluntary environmental initiatives

innovation in pollution control comparisons of the various institutional arrangements for controlling pollutant emissions from individual sources effluent fees effluent control subsidies marketable permits and direct command and control regulation have usually focused on their static efficiency properties and institutional feasibility e g dales 1968 zerbe 1970 baumol and oates 1975 kneese and schultze 1975 marin 1978 mills and white 1978 spence and weitzman 1978 russell 1979 a relatively neglected area has been the study of how each arrangement influences innovation in pollution control a few studies e g kneese and schultze 1975 marin 1978 mills and white 1978 russell 1979 have casually claimed that the control methods that rely on economic incentives provide superior incentives for innovation but there have been few systematic studies of the question this paper provides a simple model of pollution control innovation by a profitmaximizing polluter who is subject to the various control methods the consequences of the methods will be explored in three major contexts first we assume that the polluter and the innovation is a small enough part of the overall pollution problem so that none of the important marginal conditions are changed by the innovation second we assume that the polluter and the innovation are important enough so that marginal conditions are changed by the innovations but that the governmental authority determining pollution control incentives or levels fails to make the appropriate adjustments third we again assume that the innovation causes marginal conditions to change but in this case the governmental authority makes the appropriate adjustments we use the term ratcheting to describe this last phenomenon in all cases we assume that the innovating polluter correctly predicts the reactions of the governmental authority and bases his innovation decisions on that prediction a profit maximizing entrepreneur would normally be expected to adopt any innovation that promised gains present discounted value to him in excess of initial

the potential of environmental regulation to change managerial perception environmental management competitiveness and financial performance abstract this research presents an overview of where the gaps in the literature exist in relation to the link between environmental regulation and proactive environmental management and competitiveness and incorporates them in a whole model different papers have highlighted only partial aspects of these relationships specifically this research evaluates the relationship between managerial perception and the different styles of environmental regulations command and control versus voluntary norms the mediator role of environmental management in the link between environmental regulations and competitiveness the effect of competitiveness on financial performance and the two way relationship between proactive environmental management and financial performance finally this paper uses statistical evidence to test and estimate causal relationships through a structural equation modelling of 208 firms affected by ippc law in spain there is a lack of systematic statistical evidence on this topic in the literature which mainly focuses on case studies the results show that when environmental regulation stems from command and control legislation its influence on managerial perception and proactive environmental management is not significant however when environmental regulation stems from voluntary norms its effects are positive moreover investment in proactive environmental management contributes to increasing the competitiveness of the firm cost and differentiation competitive advantage have a positive impact on financial performance finally the link between proactive environmental management and financial performance may follow different paths 1 neither direct nor single because it can depend on competitive advantage and 2 direct because there is a significant two way relationship between these variables proactive environmental management influences financial performance and financial performance influences proactive environmental management

does host market regulation induce cross border environmental innovation this paper evaluates the effect of host country environmental policy stringency on the offshoring of environmental patents for 2000 top world r d performers it is shown that a more stringent environmental regulation triggers both the extensive and intensive margin of patent offshoring in the field of environmental technologies results are robust to various different specifications alternative definitions of innovation offshoring and of regulation restrictions and to the consideration of possible endogeneity of regulation it is suggested inter alia that r d subsidies and non market based regulatory measures are more important than market based instruments as drivers of cross border environmental innovation length 26 pages

strategic quality competition and the porter hypothesis abstract this paper offers new support for the porter hypothesis within the context of a quality competition framework we use a duopoly model of vertical product differentiation in which two firms simultaneously choose to produce either a high environmentally friendly quality or low standard quality variant of a good before engaging in price competition in this simple setting we show that a nash equilibrium of the game featuring the low quality good can be pareto dominated by a different strategy profile in which both firms opt in favour of the green product our analysis demonstrates that in such a case both firms stand to profit from the introduction of a rule penalizing any firm refusing to produce the environmentally friendly product we also find that consumers themselves may benefit from such regulations this is always the case when shifting from low quality to high quality production brings about a cost efficiency improvement

start up sustainability an insurmountable cost or a life giving investment abstract an outstanding question in the entrepreneurship literature reigns given recent emphases on sustainable business practices and corporate social responsibility if small start ups are generally stretched for time and resources does it enhance their chances for survival and success to be sustainable and socially responsible new firms can aid in rectifying pressing environmental and social issues by being more sustainable while many entrepreneurs like a sustainable business model and or mission investment may not follow so willingly this paper examines a sample of 300 start ups across thirty cities around the world to consider whether sustainability is rewarded by investors investors signal confidence in start ups when they infuse life extending investments into them this analysis also considers whether a more sustainable national context affects investor confidence and whether a sustainable firm within a sustainable national context gains more investor attention and investment results show that investors avoid sustainable firms particularly those that are environmentally sustainable moreover investors enjoy national contexts that are socially responsible but pay no attention to those that are environmentally conscious in addition firms that are sustainable in a sustainable national context are not better off for attracting investment insights for policy are that mainstream investors are attracted by national social policies but these investors are unlikely to be the main force behind sustainable venture growth under today s conditions

ceo compensation and bank risk is compensation in banking structured to promote risk taking abstract this paper examines whether executive compensation in banking is structured to promote risk taking we find that on average bank ceos receive less cash compensation are less likely to participate in a stock option plan hold fewer stock options and receive a smaller percentage of their total compensation in the form of options and stock than do ceos in other industries cross sectional differences in the structure of compensation contracts within banking are also examined we find a positive and significant relation between the importance of equity based incentives and the value of the bank s charter this result is inconsistent with the hypothesis that compensation policies promote risk taking in banking

ceo pay firm size and corporate performance evidence from canada executive compensation of 755 canadian firms is examined over the period 1991 95 and evidence is obtained consistent with previous studies ceo pay rises with firm size and compensation is tied to company performance in addition executives in utilities earn lower pay and their compensation is less responsive to performance than is true for their counterparts in other industries some novel findings are also documented first the sales elasticity of ceo compensation is greater in larger firms second while ceo turnover probability is generally negatively related to the firm s stock performance the threat of dismissal appear to be less pronounced in small firms jel classification g35 j33 salaire des pdg taille de l entreprise et performance des societes resultats pour le canada en etudiant le salaire des pdg de 755 entreprises canadiennes au cours de la periode 1991 95 l auteur confirme certains resultats d etudes anterieures le salaire du pdg croit avec la taille de l entreprise et il est liea la performance de l entreprise il appert aussi que les cadres dans les entreprises de service public gagnent moins relativement parlant et que leur salaire est moins sensible aux ecarts de performance que dans les autres secteurs on met aussi a jour certains resultats inedits d abord il semble que l elasticite du salaire du pdg par rapport au niveau des ventes est plus forte dans les plus grandes entreprises ensuite alors que la probabilite de roulement est en general co reliee negativement a la performance des actions en bourse de l entreprise la menace de renvoi semble moins prononcee dans les petites entreprises

the impact of standards and regulation on innovation in uncertain markets abstract this study analyses the impact of formal standards and regulation on firms innovation efficiency considering different levels of market uncertainty we argue that formal standards and regulation have different effects depending on the extent of market uncertainty derived from theoretical considerations about information asymmetry and regulatory capture our empirical analysis is based on the german community innovation survey cis the results show that formal standards lead to lower innovation efficiency in markets with low uncertainty while regulations have the opposite effect in cases of high market uncertainty we observe that regulation leads to lower innovation efficiency while formal standards have the reverse effect our results have important implications for the future application of both instruments showing that their benefits heavily depend on the market environment

evaluating fiscal effort in heterogeneous contexts using a conditional nonparametric frontier approach abstractthe aim of this paper is the estimation of a measure of the fiscal effort made by certain countries taking into account the heterogeneous contexts in which they operate over a ten year peri

information processing and organizational structure abstract standard economic theories of the firm and other organizations stress profit maximization as the foundation for derivation of predictable behavior yet statistical and case study evidence continues to accumulate that real firms do not act as required by the neoclassical framework instead of being represented by ever more elaborate maximization models the firm can be modeled simply as a network of information processing agents the actions of the firm are then a function only of the network structure and the information processing capabilities of the agents this approach can be used to explain a number of features of organizational behavior including the process of technological diffusion it also suggests that derivation of the optimal organizational structure may be computationally complex with a number of implications for economic theory and policy development