Environmental Regulations and Industrial Plant Inefficiency

The first part of this book analyzes the relationship between environmental regulations and inefficiency levels of firms. Also, it includes the difference methodologies used by researchers to examine this relationship. At the end of this part, we examined the relationship between the environmental regulations and inefficiency scores of plants in both private and public sectors in Egypt through the period 1996-2001. To investigate this relationship, we used a stochastic frontier cost function to measure inefficiency levels of plants and test factors affecting these scores. The results of the econometric models indicate that plants more affected by environmental regulations are associated with higher inefficiency levels. The second part of this book examines possible factors determining plant's environmental performance. Two methodologies (truncated regression and ordered probit model) are used in this part depending on dependent variable used. The estimated results highlight the role played by regulators, market pressures, and worker security as the main factors accounting for plants' environmental performance.