Assessing the Impact of Formal and Informal Regulations on Environmental and Economic Performance of Brazilian Manufacturing Firms

Féres, José and Reynaud, Arnaud (2012) Assessing the Impact of Formal and Informal Regulations on Environmental and Economic Performance of Brazilian Manufacturing Firms. Environmental and Resource Economics, 52 (1). pp. 65-85.

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Official URL: http://tse-fr.eu/pub/25669

Abstract

This study investigates the impact of formal and informal regulations on environmental and economic performance of Brazilian manufacturing firms. We adopt a dual approach where production technology is represented by a cost function, approximated by a translog form. Pollution is considered as a negative by-product that can be modified trough using either formal regulation (inspections or sanctions) or informal regulation (community pressure). A simultaneous equation model is estimated by three-stage least squares on a sample of 404 industrial establishments located in the state of São Paulo, Brazil. We show that pollution abatement costs for the Brazilian manufacturing sector are different from zero which suggests that pollution emissions are affected by environmental regulation. We also demonstrate that environmental performance of firms is jointly affected by formal and informal regulation. Lastly, formal regulation is largely influenced by informal regulation and more specifically by community pressure.

Item Type: Article
Language: English
Date: May 2012
Refereed: Yes
Uncontrolled Keywords: Environmental regulation, Firms, Costs, Brazil
JEL codes: L5 - Regulation and Industrial Policy
Q21 - Demand and Supply
Q25 - Water
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:24
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:25669
URI: http://publications.ut-capitole.fr/id/eprint/15232

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