Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out?

38 Pages Posted: 16 Jan 2014

See all articles by Hanna Hottenrott

Hanna Hottenrott

Technische Universität München (TUM)

Sascha Rexhauser

ZEW – Leibniz Centre for European Economic Research

Date Written: December 15, 2013

Abstract

Significant policy effort is devoted to stimulate the development, adoption and diffusion of environmentally-friendly technology. Sceptics worry about the effects of regulation-induced environmental technology on firms’ competitiveness. Since innovation is a crucial productivity driver, a potential crowding out of inventive efforts could increase the cost of mitigating environmental damage. Using matching techniques, we study the short-term effects of regulation-induced environmental technology on non-green innovative activities for a sample of firms in Germany. We find indeed some evidence for a crowding out of the firms’ in-house R&D. The estimated treatment effect is larger for firms that are likely to face financing constraints. However, we do not find negative effects on the number of ongoing R&D projects, investments in innovation-related fixed assets or on the outcome of innovation projects. Likewise, for firms with subsidy-backed environmental innovations no crowding out is found.

Keywords: Environmental Policy, Regulation, R&D, Technological Change, Innovation, Crowding Out

JEL Classification: O32, O33, Q55

Suggested Citation

Hottenrott, Hanna and Rexhauser, Sascha, Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out? (December 15, 2013). ZEW - Centre for European Economic Research Discussion Paper No. 13-115. Available at SSRN: https://ssrn.com/abstract=2379461 or http://dx.doi.org/10.2139/ssrn.2379461

Hanna Hottenrott

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, 80333
Germany

Sascha Rexhauser (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
37
Abstract Views
435
PlumX Metrics