Proper design of environmental regulation-case of top-runner system for refrigerator industry

Regarding the relation between the environmental regulation and the global competitiveness, Porter and Linde asserted that firms can actually benefit from "properly crafted environmental regulations" that are more stringent (or are imposed earlier) than those faced by their competitors in other countries, and by stimulating innovation, strict environmental regulations can actually enhance competitiveness. Since environmental constraints that will affect the product will be highly uncertain, in the long term perspectives it is very difficult to design the standard target value and the framework of the regulation, and in the short term it is necessary to consider the technology development trends and the market competition situation. In this paper, by analysing the implementation results of the top-runner system in the refrigerator industry in Japan, which manufactures and sells the large energy consumption appliances, we made it clear that the condition of "the properly designed environmental regulation" is to keep the function to revise its target value and framework in consideration of the change of the market competition situation.