The effect of environmental regulation on firms’ competitive performance: the case of the Building & Construction sector in some EU regions

There is a considerable debate on the effects of environmental regulation on competitive performance. Based on survey data, this paper analyzes the two main research questions , derived from literature, on the links between environmental regulation and competitiveness, by focusing on firms operating in the building and construction sector, i.e.: 1) whether environmental policy stringency affects the competitive performance of firms in the building and construction sector 2) and how a specific form of environmental regulation (direct regulation, economic instruments and soft instruments) affects this performance? By applying a regression analysis, we find that a more stringent environmental regulation provides a positive impulse for increasing investments in advanced technological equipment and innovative products; moreover, a well-designed “direct regulation” appears to be the most effective policy instrument for prompting the positive impact of environmental policies on competitiveness.