SECTORAL IMPACT OF

NATIONAL AND
INTERNATIONAL
REGULATION

Biju Paul Abraham

Public Policy & Management Group
IIM Calcutta
The Context

• The globalization of markets has increased the regulatory

uncertainty for firms

• Environmental regulation is one area where increased levels

of uncertainty lead to operational constraints

• Firms need to be both understand the reasons for differences

in regulation as well as decide on their responses
Why do environmental regulations vary?
• Environmental regulations differ across countries primarily because
it has been difficult to agree on multi-lateral, mandatory, regulatory
standards that are acceptable to all countries

• Differences in levels of development, and differing views on

importance of environmental issues depending on levels of
development, account for many of the differences
• The Developed-Developing country divide in regulation

• However, firms that work across different markets are expected to

abide by different environmental standards

• Coping with such differences presents major challenges for the firms
Differences in firm environmental behavior
• Three major aspect of institutional behavior

Regulative

Normative

Cognitive

• Firm behavior is affected not just by environmental regulation, but

also by other factors that have an environmental impact
Factors contributing to acceptance of
environmental regulation

• Extent of integration with markets abroad among firms in the

sector

• Nature of domestic and international competition in the sector

• Perceived need to be early adaptors