The purpose of this paper is to explore the impacts of environmental regulations on industry development. The environmental legislation began to take shape in Taiwan in the 1970s. Taiwan Environmental Protection Administration was established in 1987, an expansion from a bureau under the Department of Health. However, more stringent environmental regulations and enforcement began around 2000. The empirical results indicate a strong negative correlation between the profit margin of a industry and its ratio of pollution abatement costs to production value in 2002-2014. During 1988 -2000, the correlation was much weaker. Meanwhile, the share of production value in the manufacturing sector has a strong positive correlation with the profit margin in 2002-2014.