Innovation and Environmental Stringency: The Case of Sulfur Dioxide Abatement
CentER Discussion Paper Series No. 2005-18
33 Pages Posted: 21 Feb 2005
Date Written: January 2005
A weak version of the Porter hypothesis claims that strict environmental policy provides positive innovation incentives, hence triggering improved competitiveness and securing environmental quality. In a comparative way, this paper empirically tests this hypothesis across countries by linking environmental stringency to innovation proxied by patents in the field of SO2 abatement over the period 1970-2000. Three different models of environmental stringency are examined. Two of these models do not reveal a positive significant effect on innovation as a result of increased stringency. In the theoretically preferred model, however, a positive relationship between environmental stringency and innovation is obtained.
Keywords: patents, pollution, control, environmental stringency, sulfur dioxide, innovation
JEL Classification: L51, L94, O31
Suggested Citation: Suggested Citation