Environmental Regulation and Innovation: A Panel Data Study

Posted: 20 May 2000

See all articles by Adam B. Jaffe

Adam B. Jaffe

Brandeis University; Motu Economic and Public Policy Research; National Bureau of Economic Research (NBER)

Karen L. Palmer

Resources for the Future

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Abstract

In a 1991 essay in Scientific American, Michael Porter suggested that environmental regulation may have a positive effect on the performance of domestic firms relative to their foreign competitors by stimulating domestic innovation. We examine the stylized facts regarding environmental expenditures and innovation in a panel of manufacturing industries. We find that lagged environmental compliance expenditures have a significant positive effect on R&D expenditures when we control for unobserved industry-specific effects. We find little evidence, however, that industries' inventive output (as measured by successful patent applications) is related to compliance cost.

Suggested Citation

Jaffe, Adam B. and Palmer, Karen, Environmental Regulation and Innovation: A Panel Data Study. Available at SSRN: https://ssrn.com/abstract=109754

Adam B. Jaffe (Contact Author)

Brandeis University ( email )

Waltham, MA 02454-9110
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HOME PAGE: http://www.brandeis.edu/global/people/faculty/jaff

Motu Economic and Public Policy Research ( email )

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National Bureau of Economic Research (NBER)

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Karen Palmer

Resources for the Future ( email )

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Washington, DC 20036
United States

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