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Stringency of environmental regulation and eco-innovation: Evidence from the eleventh Five-Year Plan and green patents

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  • Kesidou, Effie
  • Wu, Lichao

Abstract

Using the variation in pollution reduction targets across provinces and time variations (before and after the eleventh Five-Year Plan), we examine the impact of stricter environmental regulation upon the production of green patents by firms in China. We find that Chinese manufacturing firms, located in provinces with stricter pollution targets, produced a higher volume and intensity of green patents. Our results suggest that stricter environmental regulatory frameworks in emerging economies are not only combating pollution, but also shifting the innovation activities of manufacturing firms towards building a stock of knowledge in environmental protection. This process, undoubtedly, has the potential to generate disruptive eco-innovations.

Suggested Citation

  • Kesidou, Effie & Wu, Lichao, 2020. "Stringency of environmental regulation and eco-innovation: Evidence from the eleventh Five-Year Plan and green patents," Economics Letters, Elsevier, vol. 190(C).
    • Handle: RePEc:eee:ecolet:v:190:y:2020:i:c:s0165176520300823
    DOI: 10.1016/j.econlet.2020.109090
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Environmental regulation; Eco-innovation; Green patents; Difference-in-differences;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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