The Impact of Environmental Regulation on Competitiveness in the German Manufacturing Industry

This study examines in three case studies whether German plants suffer from a negative impact on competitiveness caused by stringent environmental legislation. A micro level analysis showed that abatement initiatives had in general been implemented without economic damage and did not touch on the core business. Moreover, German sample plants ranked environmental pressure as relatively unimportant compared with other competitive pressures. Finally, the low absolute levels of compliance costs, at least in two of the case studies, explained why environmental regulation cannot have a great influence on competitiveness in the chosen sectors. High productivity levels were not among the essential factors explaining our findings. It implies for our case studies that also plants with lower productivity can withstand high compliance costs.