Timing and intensity effects of environmental investments

This paper examines the investment timing and intensity conditions under which advantages may exist for first movers in environmental investments. The potential advantages on which the paper focuses are timing and intensity of investments in recent pollution-reducing manufacturing technologies that produce salable product at the same time that they reduce pollution. The data come from 50 chemical bleached paper pulp manufacturers in eight countries. The model measures the impact of the independent variables on growth in profits from the mid-1980s to the early 1990s, controlling for national differences in environmental regulations, among other variables. Results indicate a positive relationship between timing of investments and profit growth. There is also evidence that more intense investment patterns, when not tempered by sufficient time to absorb the investments, may lead to lower profit growth.