Development of Methods for Assessing the Impact of Environmental Regulation on Competitiveness

Abstract

Discussions about whether the improvement of environmental indicators of companies has a positive or negative impact on their competitiveness (i.e., based on their economic indicators) have been conducted for a long time: environmentalists and the public insist on stricter environmental standards, and politicians, economists, and the business community are looking for a compromise between the costs of environmental protection and economic efficiency. Understanding this relationship is important for all disputing parties since two goals are simultaneously pursued: ensuring high quality of the environment, which requires unproductive costs, and obtaining good economic results. This is also important for separating environmental, economic, and political goals: is the policy of “greening” business implemented in developed countries a real fight against climate change and bad ecology, or is it used as a tool for mobilizing the electorate and hidden protectionism? Despite a large number of studies conducted in this area, the question remains open about the direction of the causal relationship: whether environmental investments lead to higher profits or simply act as indicators of firms with high financial results. This article presents a comparative analysis of methods and models for forming relationships between the environmental and economic characteristics of firms in the context of the activation of the international environmental agenda as one of the promising areas for the development of economic analysis. The authors show that the relationship between environmental regulation and competitiveness is not the same and depends on the market structure of the industry, while important problems of analysis are the presence of different approaches to defining the concepts of “competitiveness,” “economic efficiency,” “environmental efficiency,” and “regulatory rigor,” as well as the use of various indicators for their measurement, the complexity of selecting indirect indicators of environmental regulation and competitiveness, and the availability and quality of data. Furthermore,the possibilities and problems of the empirical analysis of the relationship between environmental and economic efficiency according to Russian companies and domestic statistics are studied.

Keywords

• competitiveness
• economic efficiency
• environmental costs
• environmental efficiency
• methods and models of environmental regulation