Does Reducing Air Pollution Make Inventors More Innovative? Evidence from the NOx Budget Program

51 Pages Posted: 26 Mar 2020

See all articles by Yue Luo

Yue Luo

Hong Kong Polytechnic University, School of Accounting and Finance, Students

Yangyang Chen

City University of Hong Kong (CityUHK) - Department of Accountancy

Ji-Chai Lin

Hong Kong PolyU

Date Written: March 2, 2020

Abstract

Using the NOx budget trading program (NBP) as a quasi-natural experiment, we examine whether a reduction in air pollution enhances inventor risk-taking, thus making inventors more innovative. We find that inventors located in NBP participating states produce more patents after the introduction of the NBP. These patents also receive more forward citations and have higher economic value. The effect of the NBP is larger for less experienced inventors and inventors living in high-pollution areas. Further, inventors located in NBP participating states engage more in experimental innovation and less in specialization innovation after the NBP, which confirms the risk-taking channel.

Keywords: Air pollution; Inventor productivity; Innovation strategy

JEL Classification: G39, G40, O31

Suggested Citation

Luo, Yue and Chen, Yangyang and Lin, Ji-Chai, Does Reducing Air Pollution Make Inventors More Innovative? Evidence from the NOx Budget Program (March 2, 2020). Available at SSRN: https://ssrn.com/abstract=3547087 or http://dx.doi.org/10.2139/ssrn.3547087

Yue Luo

Hong Kong Polytechnic University, School of Accounting and Finance, Students ( email )

Hung Hom
Kowloon
Hong Kong

Yangyang Chen (Contact Author)

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

Ji-Chai Lin

Hong Kong PolyU ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon
China

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