Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market

73 Pages Posted: 23 Nov 2021

See all articles by Rik Rozendaal

Rik Rozendaal

Tilburg University

Herman R.J. Vollebergh

PBL Netherlands Environmental Assessment Agency (Bilthoven); Tilburg Unversity ; CESifo Institute; Tilburg Sustainability Centre; Tilburg University - Tilburg University School of Economics and Management

Date Written: 2021

Abstract

This article tests the effects of fuel economy and greenhouse gas emission standards on the direction of innovation, in particular on breakthrough technologies in the automotive industry. We develop an intuitive measure of standard stringency that captures the policy’s most important features for the decision as to whether or not to innovate. To test the role of these standards relative to prices and taxes, we construct a firm-level panel of patents in clean and dirty automotive technologies for the years 2000-2016. Our results indicate that standards are a very robust driver inducing clean innovation, whereas taxes also seem to play a role but prices (net of taxes) do not. This effect is driven by patenting for breakthrough technologies, in particular electric vehicle and hydrogen fuel cell technologies. We find no evidence that these policies negatively impact dirty innovation.

Keywords: environmental policy instruments, regulatory stringency, innovation, directed technical change

JEL Classification: O300, Q550, Q580

Suggested Citation

Rozendaal, Rik and Vollebergh, Herman R.J., Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market (2021). CESifo Working Paper No. 9422, Available at SSRN: https://ssrn.com/abstract=3969578 or http://dx.doi.org/10.2139/ssrn.3969578

Rik Rozendaal (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Herman R.J. Vollebergh

PBL Netherlands Environmental Assessment Agency (Bilthoven) ( email )

Bezuidenhoutseweg 30
Den Haag, 2594 AV
Netherlands
+31655736920 (Phone)

Tilburg Unversity ( email )

Tilburg
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/h.r.j.vollebergh.htm

CESifo Institute ( email )

Munich
Germany

Tilburg Sustainability Centre ( email )

P.O. Box 90153
Tilburg, North Brabant 5000 LE
Netherlands

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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