- Porter hypothesis
According to the Porter Hypothesis strict
environmental regulation s can induce efficiency and encourage innovations that help improve commercial competitiveness. The hypothesis was formulated by the economistMichael Porter .According to this hypothesis, strict environmental regulation triggers the discovery and introduction of cleaner technologies and environmental improvements, the innovation effect, making production processes and products more efficient. The cost savings that can be achieved are sufficient to overcompensate for both the compliance costs directly attributed to new regulations and the innovation costs.
In the
first mover advantage , a company is able to exploit innovation bylearning curve effects orpatent ing and attains a dominating competitive position compared to companies in countries where environmental regulations were enforced much later.The Porter hypothesis has been applied to REACH. In one conclusion [1] companies that adopt a
cost leadership business strategy and have a relatively small product portfolio will fare better than companies that compete byproduct differentiation and have a larger number of chemicals that require regulation.References
* [1] "Chemicals Regulation and the Porter Hypothesis: A Critical Review of the New European Chemicals Regulation" Torsten Frohwein, Bernd Hansjürgens Journal of Business Chemistry January 2005 [http://www.wirtschaftschemie.de/journal/20051-19-36.pdf]
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