The Impact of Environmental Regulations on Industry Competitiveness: Evidence from Manufacturing Industries of USA, U.K & Canada

This study investigates the effects of environmental regulations on manufacturing industries of the selected OECD countries (USA, U.K & Canada) using Porter Hypothesis (PH) and structure- conduct- performance- Paradigm (SCPP) during 1970-2013, by regarding to simultaneous equations, and considering interoperability among market elements.Pollution Abatement Capital Expenditures (PACE) and environmental innovations are substitute variables for environmental regulations and competitiveness subsequently. The results show that increased industries expenditure to reduce emissions significantly increases their innovations and this proves Weak Porter Hypothesis (WPH) indicating positive impact of environmental regulation on competitiveness of the industries. Therefore, environmental regulations promote not only environmental quality, but also improve the industries competitiveness. The results, also, confirm the view that environmental policies are a win-win strategy.