Toward a New Conception of the Environment-Competitiveness Relationship
Author(s)
Porter, Michael E.; Van Der Linde, Claas
Abstract
Standard economic doctrine assumes that firms exist in an equilibrium in which they have already optimized the products and services they offer and reduced production costs as much as possible. In such a static model economists do not expect to find additional cost savings waiting to be exploited by firms any more than they expect to find a $10 dollar bill lying on the ground. If it had been there, it would already have been picked up. This doctrine views regulation always as a burden, imposing some additional cost above the minimum that has theoretically been reached. In reality, however, this static model of competition has become increasingly obsolete. Today competition is dynamic and based on innovation. In recent years companies have been discovering that, when their attention is focused by properly designed environmental regulations, their innovative responses can improve, or at least do not hurt, their ability to compete with other companies domestically and internationally.
