Clean and Dirty International Technology Diffusion

50 Pages Posted: 5 Jun 2013 Last revised: 15 Jun 2014

See all articles by Valentina Bosetti

Valentina Bosetti

Bocconi University; CMCC - Euro Mediterranean Centre for Climate Change

Elena Verdolini

Fondazione Eni Enrico Mattei (FEEM), CMCC - Euro Mediterranean Centre for Climate Change

Date Written: June 3, 2013

Abstract

This paper investigates the role of Intellectual Property Rights (IPR) protection and Environmental Policies (EPs) on clean (renewable) and dirty (fossil-based) technology diffusion from top-innovators. IPR protection and EPs are extensively debated policy tools, as IPR protection addresses knowledge market failure, while EPs respond to pressing local and global environmental externalities. A model of monopolistic competition inspired by the recent trade literature shows that the profits associated with exporting a blueprint are a function of the quality of the idea and of market and institutional characteristics of the receiving country. We test the empirical implications of our model using patent data in renewable and fossil efficient power technologies for 13 top innovating countries and 40 patenting authorities. We improve on previous contributions by accounting for unobserved heterogeneity and for the endogeneity of policy proxies through a Generalized Method of Moment estimator. We show that knowledge transfer through patent duplication increases with the level of IPR protection, but with slight diminishing marginal returns. The effect is stronger for clean technologies, which are arguably less mature and more sensitive to uncertainty. Commitment to EPs also increases the incentives for patent duplication. The magnitude of the effect is conditional on the nature of the technology and on the specific policy instrument.

Keywords: Technology Diffusion and Transfer, Innovation, Patents, Energy Technologies, Environmental Policy, Intellectual Property Rights

JEL Classification: O33, O34, Q55

Suggested Citation

Bosetti, Valentina and Verdolini, Elena, Clean and Dirty International Technology Diffusion (June 3, 2013). FEEM Working Paper No. 43.2913, Available at SSRN: https://ssrn.com/abstract=2273458 or http://dx.doi.org/10.2139/ssrn.2273458

Valentina Bosetti

Bocconi University

Via Gobbi 5
Milan, 20136
Italy

CMCC - Euro Mediterranean Centre for Climate Change

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Elena Verdolini (Contact Author)

Fondazione Eni Enrico Mattei (FEEM), CMCC - Euro Mediterranean Centre for Climate Change ( email )

C.so Magenta 63
Milano, 20123
Italy

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