Less Brown and More Green: A Test of the Porter Hypothesis on Hog Productivity in North Carolina from 1993 to 2014

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Kelbly, Paul J
Porter Hypothesis; Productivity; Regulations; Agribusiness; Agricultural Economics; Agriculture Law; Other Animal Sciences
thesis / dissertation description
We tested the validity of the Porter hypothesis for North Carolina hog production from 1993 to 2014 using the theory of induced innovation to understand how government regulations affected innovation and productivity as well as motivate our empirical analysis. The Porter hypothesis states that government regulations that are constructed to reduce pollution could increase firm productivity. The theory of induced innovation states that as a given input becomes expensive through government regulations, producers innovate new technologies to use less of that given input. We used an econometric model on state-level data from 1993 to 2014 for Minnesota, Iowa, Illinois, North Carolina, Ohio, and Alabama using two types of fixed effects regression models and two types of regression models with slope dummy variables. Non-federal (NONFED) and federal (FED) agricultural research and development expenditures were proxies for innovation inputs. Stocking density (STOCKD) was used to capture the effects of government regulations on innovation and hog productivity. Results suggested that government regulations impacted hog productivity in North Carolina, providing evidence for the Porter Hypothesis; however, the innovation variables were only significant in the slope dummy litter rate model, which provided little evidence for the theory of induced innovation.