It has long been argued that the implementation of flexible policy instruments, such as environmentally-related taxes and tradable permits, is likely to lead to greater technological innovation than more prescriptive forms of regulation such as technology-based standards. One of the principle...

Jaffe and Palmer (1997) present three distinct variants of the so-called Porter Hypothesis. The weak version of the hypothesis posits that environmental regulation will stimulate certain kinds of environmental innovations. The narrow version of the hypothesis asserts that flexible environmental...