Does Reducing Air Pollution Make Inventors More Innovative? Evidence from the NOx Budget Program
51 Pages Posted: 26 Mar 2020
Date Written: March 2, 2020
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: Suggested Citation