ENVIRONMENTAL LAW INSTITUTE RESEARCH REPORT ,QQRYDWLRQ&RVW DQG(QYLURQPHQWDO...

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ENVIRONMENTAL LAW INSTITUTE RESEARCH REPORT ,QQRYDWLRQ&RVW DQG(QYLURQPHQWDO 5HJXODWLRQ3HUVSHFWLYHVRQ%XVLQHVV3ROLF\DQG/HJDO)DFWRUV $IIHFWLQJWKH&RVWRI &RPSOLDQFH MAY 1999
INNOVATION, COST AND REGULATION: PERSPECTIVES ON BUSINESS, POLICY AND LEGAL FACTORS AFFECTING THE COST OF ENVIRONMENTAL COMPLIANCE Copyright © 1999 Environmental Law Institute®
Acknowledgments This report was prepared by the Environmental Law Institute under Cooperative Agreement CR XXXXXXXXXX, with funding from the U.S. Environmental Protection Agency.
	
Document Preview: Question #1ScenarioWhat is the most likely outcome of the proposed “gunk” control regulation?  and Why? Question #2After reading the Environmental Law Institute Research Paper (see attached PDF paper) on how appropriately designed regulations might actually encourage technological innovation, how likely do you think the Porter Hypothesis is?

Robert · Accepted Answer

1) “Gunk”, which is a pollution by product of manufacturing computer processors, causes 
external damage to the inhabitants nearby the manufacturing area. To reduce the 
pollution, the environmental activists have proposed a plan. They have proposed a plan 
where the pollution emission will be reduced. But this plan is costly. It costs about $100 
million per manufacturing facility per year. But it has been observed that this new 
technology is not very effective. It can reduce gunk emission which can be beneficial to 
only about 12 million people or so who live nearby. Thus the new technology is not so 
effective. Now we will see the effect of this by product on the affected people. It has been 
found that gunk has caused cold like diseases among people. No evidences of any fatal 
diseases, birth defects or any death have been found yet. While estimating the external 
cost of gunk it has been calculated that the external cost to each of the 12 million 
inhabitants is $50. 
Thus total external cost to all the affected people = $ (12×50) million 
             = $ 600 million 
Therefore total external cost is about $600 million per year. 
Now,

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