Industrial innovation and government environmental regulation: Some lessons from the past

Abstract While government regulatory activity of all kinds was at historically high levels between the mid-1960s and the mid-1970s, the following decade saw a strong trend towards deregulation. Since the mid-1980s. with the increasingly obvious detrimental impact of environmental pollution and growing fears over ozone layer depletion and global warming, there have been strong pressures for more stringent environmental regulations. During the earlier period of intense regulatory activity, government regulations frequently had unnecessarily large negative impacts on regulated firms. This paper addresses a number of these impacts and their underlying causes and suggests how the negative effects of environmental regulations can be minimized while at the same time offering adequate protection to the environment.