Advanced Search
MyIDEAS: Login to save this paper or follow this series

Determinants of Renewable Energy Innovation: Environmental Policies vs. Market Regulation

Contents:

Author Info

  • Francesco Nicolli

    ()

  • Francesco Vona
  • Lionel Nesta

Abstract

This paper carries out a comprehensive analysis of renewable energy innovations considering four mechanisms suggested by innovation models: 1. policy-inducement; 2. market structure; 3. demand and social cohesion- mainly proxied by income inequality; 4. characteristics of country knowledge base. For OECD countries and years 1970-2005, we build a unique dataset containing time-varying information on quality-adjusted patent production in renewable energy, the latter being a function of environmental policies, green R&D, entry barriers, knowledge stock, knowledge diversity and income inequality. We develop count data models using the Generalized Method of Moments (GMM) to account for endogeneity of policy support. Our synthetic policy index positively affects innovations especially in countries with deregulated energy markets and low entry barriers. The effect of entry barriers and inequality is negative and of similar magnitude as that of policy. Product market liberalization positively affects green patent generation, especially so when ambitious policies are adopted, when the initial level of public R&D expenditures and when the initial share of distributed energy generation is high. Our results are robust to alternative specifications, to the inclusion of technology-specific effects and to the use of quality-adjusted patents as dependent variables. In the latter case, the estimated effect of lowering entry barriers and of knowledge diversity almost double on citation count relatively to patent count.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://out.economia.unife.it/uploads/dip_deit/quaderni/201204.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Ferrara, Department of Economics in its series Working Papers with number 201204.

as in new window
Length: 56 pages
Date of creation: 12 Feb 2012
Date of revision:
Handle: RePEc:udf:wpaper:201204

Contact details of provider:
Postal: Via Voltapaletto, 11 - I-44121 Ferrara (Italy)
Phone: +39 0532 455006
Fax: +39 0532 205349
Web page: http://dipem.economia.unife.it/
More information through EDIRC

Related research

Keywords: renewable energy technology; patent; environmental policies; product market regulation; inequality;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Frondel, Manuel & Horbach, Jens & Rennings, Klaus, 2004. "End-of-Pipe or Cleaner Production? An Empirical Comparison of Environmental Innovation Decisions Across OECD Countries," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 04-82, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Leah Platt Boustan & Fernando Ferreira & Hernan Winkler & Eric Zolt, 2010. "Income Inequality and Local Government in the United States, 1970-2000," NBER Working Papers, National Bureau of Economic Research, Inc 16299, National Bureau of Economic Research, Inc.
  3. Brian R. Copeland & M. Scott Taylor, 2003. "Trade, Growth and the Environment," NBER Working Papers, National Bureau of Economic Research, Inc 9823, National Bureau of Economic Research, Inc.
  4. Lee, Jaegul & Veloso, Francisco M. & Hounshell, David A., 2011. "Linking induced technological change, and environmental regulation: Evidence from patenting in the U.S. auto industry," Research Policy, Elsevier, Elsevier, vol. 40(9), pages 1240-1252.
  5. Jamasb, Tooraj & Pollitt, Michael, 2008. "Liberalisation and R&D in network industries: The case of the electricity industry," Research Policy, Elsevier, Elsevier, vol. 37(6-7), pages 995-1008, July.
  6. Hall, Bronwyn H & Jaffe, Adam B & Trajtenberg, Manuel, 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3094, C.E.P.R. Discussion Papers.
  7. Popp, David & Hafner, Tamara & Johnstone, Nick, 2011. "Environmental policy vs. public pressure: Innovation and diffusion of alternative bleaching technologies in the pulp industry," Research Policy, Elsevier, Elsevier, vol. 40(9), pages 1253-1268.
  8. Mody, Ashoka & Roy, Subhendu & Wheeler, David & Dasgupta, Susmita, 1995. "Environmental regulation and development : a cross-country empirical analysis," Policy Research Working Paper Series, The World Bank 1448, The World Bank.
  9. Downing, Paul B. & White, Lawrence J., 1986. "Innovation in pollution control," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 13(1), pages 18-29, March.
  10. Lanjouw, Jean Olson & Mody, Ashoka, 1996. "Innovation and the international diffusion of environmentally responsive technology," Research Policy, Elsevier, Elsevier, vol. 25(4), pages 549-571, June.
  11. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 5(3-4), pages 287-320.
  12. Wayne B Gray & Ronald J Shadbegian, 1997. "Environmental Regulation, Investment Timing, and Technology Choice," Working Papers, Center for Economic Studies, U.S. Census Bureau 97-9, Center for Economic Studies, U.S. Census Bureau.
  13. David, Paul A. & Bunn, Julie Ann, 1988. "The economics of gateway technologies and network evolution: Lessons from electricity supply history," Information Economics and Policy, Elsevier, Elsevier, vol. 3(2), pages 165-202.
  14. Magnani, Elisabetta, 2000. "The Environmental Kuznets Curve, environmental protection policy and income distribution," Ecological Economics, Elsevier, Elsevier, vol. 32(3), pages 431-443, March.
  15. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(2), pages 353-77, May.
  16. Brunnermeier, Smita B. & Cohen, Mark A., 2003. "Determinants of environmental innovation in US manufacturing industries," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 45(2), pages 278-293, March.
  17. Francesco Vona & Fabrizio Patriarca, 2010. "Income Inequality and the Development of Environmental Technologies," Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE) 2010-22, Observatoire Francais des Conjonctures Economiques (OFCE).
  18. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 55(2), pages 142-162, March.
  19. Xepapadeas, A. & Zeeuw, A.J. de, 1999. "Environmental policy and competitiveness: The Porter hypothesis and the composition of capital," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-80402, Tilburg University.
  20. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 2(3), pages 160-169, February.
  21. Yohe, Gary W., 1979. "The backward incidence of pollution control--some comparative statics in general equilibrium," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 6(3), pages 187-198, September.
  22. Andrea Bassanini & Ekkehard Ernst, 2002. "Labour Market Institutions, Product Market Regulation, and Innovation: Cross-Country Evidence," OECD Economics Department Working Papers, OECD Publishing 316, OECD Publishing.
  23. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2009. "The Environment and Directed Technical Change," NBER Working Papers, National Bureau of Economic Research, Inc 15451, National Bureau of Economic Research, Inc.
  24. Akkermans, Dirk & Castaldi, Carolina & Los, Bart, 2007. "Do ‘Liberal Market Economies’ Really Innovate More Radically than ‘Coordinated Market Economies’? Hall & Soskice Reconsidered," GGDC Research Memorandum, Groningen Growth and Development Centre, University of Groningen GD-91, Groningen Growth and Development Centre, University of Groningen.
  25. Massimiliano Mazzanti & Roberto Zoboli, 2009. "Municipal Waste Kuznets Curves: Evidence on Socio-Economic Drivers and Policy Effectiveness from the EU," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 44(2), pages 203-230, October.
  26. Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 19(5), pages 705-726, April.
  27. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2004. "A Tale of Two Market Failures: Technology and Environmental Policy," Discussion Papers, Resources For the Future dp-04-38, Resources For the Future.
  28. David I. Stern, 2003. "The Rise and Fall of the Environmental Kuznets Curve," Rensselaer Working Papers in Economics, Rensselaer Polytechnic Institute, Department of Economics 0302, Rensselaer Polytechnic Institute, Department of Economics.
  29. Susmita Dasgupta & Benoit Laplante & Hua Wang & David Wheeler, 2002. "Confronting the Environmental Kuznets Curve," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(1), pages 147-168, Winter.
  30. Harris, Christopher & Howitt, Peter & Vickers, John & Aghion, Philippe, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Scholarly Articles, Harvard University Department of Economics 12375013, Harvard University Department of Economics.
  31. Neuhoff, K., 2004. "Large Scale Deployment of Renewables for Electricity Generation," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0460, Faculty of Economics, University of Cambridge.
  32. David Popp & Tamara Hafner & Nick Johnstone, 2007. "Policy vs. Consumer Pressure: Innovation and Diffusion of Alternative Bleaching Technologies in the Pulp Industry," NBER Working Papers, National Bureau of Economic Research, Inc 13439, National Bureau of Economic Research, Inc.
  33. Binswanger, Hans P., 1974. "A Microeconomic Approach To Induced Innovation," Staff Papers, University of Minnesota, Department of Applied Economics 14152, University of Minnesota, Department of Applied Economics.
  34. David Popp, 2003. "Pollution control innovations and the Clean Air Act of 1990," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 22(4), pages 641-660.
  35. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis And Energy-Saving Technological Change," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(3), pages 941-975, August.
  36. Popp, David, 2006. "International innovation and diffusion of air pollution control technologies: the effects of NOX and SO2 regulation in the US, Japan, and Germany," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 51(1), pages 46-71, January.
  37. Verdolini, Elena & Galeotti, Marzio, 2011. "At home and abroad: An empirical analysis of innovation and diffusion in energy technologies," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 61(2), pages 119-134, March.
  38. Nick Johnstone & Ivan Haščič & Margarita Kalamova, 2010. "Environmental Policy Design Characteristics and Technological Innovation: Evidence from Patent Data," OECD Environment Working Papers, OECD Publishing 16, OECD Publishing.
  39. Paul Conway & Giuseppe Nicoletti, 2006. "Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights," OECD Economics Department Working Papers, OECD Publishing 530, OECD Publishing.
  40. Popp, David & Hascic, Ivan & Medhi, Neelakshi, 2011. "Technology and the diffusion of renewable energy," Energy Economics, Elsevier, Elsevier, vol. 33(4), pages 648-662, July.
  41. Kleit, Andrew N, 1992. "Enforcing Time-Inconsistent Regulation," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 30(4), pages 639-48, October.
  42. Paul A. David & Gavin Wright, 2005. "General Purpose Technologies and Productivity Surges: Historical Reflections on the Future of the ICT Revolution," Economic History, EconWPA 0502002, EconWPA.
  43. David Popp & Richard G. Newell & Adam B. Jaffe, 2009. "Energy, the Environment, and Technological Change," NBER Working Papers, National Bureau of Economic Research, Inc 14832, National Bureau of Economic Research, Inc.
  44. Akkermans, Dirk & Castaldi, Carolina & Los, Bart, 2009. "Do 'liberal market economies' really innovate more radically than 'coordinated market economies'?: Hall and Soskice reconsidered," Research Policy, Elsevier, Elsevier, vol. 38(1), pages 181-191, February.
  45. Staffan Jacobsson & Anna Bergek, 2004. "Transforming the energy sector: the evolution of technological systems in renewable energy technology," Industrial and Corporate Change, Oxford University Press, Oxford University Press, vol. 13(5), pages 815-849, October.
  46. Adam B. Jaffe & Karen Palmer, 1996. "Environmental Regulation and Innovation: A Panel Data Study," NBER Working Papers, National Bureau of Economic Research, Inc 5545, National Bureau of Economic Research, Inc.
  47. Paul Conway & Véronique Janod & Giuseppe Nicoletti, 2005. "Product Market Regulation in OECD Countries: 1998 to 2003," OECD Economics Department Working Papers, OECD Publishing 419, OECD Publishing.
  48. Lopez Ramon, 1994. "The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 27(2), pages 163-184, September.
  49. Jaffe Adam B. & Stavins Robert N., 1995. "Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 29(3), pages S43-S63, November.
  50. Nicoletti, Giuseppe & Pryor, Frederic L., 2006. "Subjective and objective measures of governmental regulations in OECD nations," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 59(3), pages 433-449, March.
  51. Aghion, Philippe, et al, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 68(3), pages 467-92, July.
  52. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
  53. Lehtonen, Markku & Nye, Sheridan, 2009. "History of electricity network control and distributed generation in the UK and Western Denmark," Energy Policy, Elsevier, Elsevier, vol. 37(6), pages 2338-2345, June.
  54. Lutz, Stefan & Lyon, Thomas P & Maxwell, John W, 2000. "Quality Leadership When Regulatory Standards Are Forthcoming," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 48(3), pages 331-48, September.
  55. Jamasb, T. & Pollitt, M.G., 2009. "Electricity Sector Liberalisation and Innovation: An Analysis of the UK Patenting Activities," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0902, Faculty of Economics, University of Cambridge.
  56. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, Elsevier, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516 Elsevier.
  57. Puller, Steven L., 2006. "The strategic use of innovation to influence regulatory standards," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 52(3), pages 690-706, November.
  58. Beise, Marian & Rennings, Klaus, 2005. "Lead markets and regulation: a framework for analyzing the international diffusion of environmental innovations," Ecological Economics, Elsevier, Elsevier, vol. 52(1), pages 5-17, January.
  59. Dooley, J J, 1998. "Unintended consequences: energy R&D in a deregulated energy market," Energy Policy, Elsevier, Elsevier, vol. 26(7), pages 547-555, June.
  60. Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier, Elsevier.
  61. Lopez, Ramon & Mitra, Siddhartha, 2000. "Corruption, Pollution, and the Kuznets Environment Curve," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 40(2), pages 137-150, September.
  62. Klepper, Steven, 1997. "Industry Life Cycles," Industrial and Corporate Change, Oxford University Press, Oxford University Press, vol. 6(1), pages 145-81.
  63. Nick Johnstone & Ivan Hascic & David Popp, 2008. "Renewable Energy Policies And Technological Innovation: Evidence Based On Patent Counts," NBER Working Papers, National Bureau of Economic Research, Inc 13760, National Bureau of Economic Research, Inc.
  64. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 26(3), pages 1120-71, September.
  65. Gawande, Kishore & Berrens, Robert P. & Bohara, Alok K., 2001. "A consumption-based theory of the environmental Kuznets curve," Ecological Economics, Elsevier, Elsevier, vol. 37(1), pages 101-112, April.
  66. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, American Economic Association, vol. 92(1), pages 160-180, March.
  67. Gambardella, Alfonso & Harhoff, Dietmar & Verspagen, Bart, 2008. "The Value of European Patents," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6848, C.E.P.R. Discussion Papers.
  68. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 33(1), pages 132-163, March.
  69. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, Elsevier, vol. 17(3), pages 335-354, April.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Francesco Nicolli & Francesco Vona, 2012. "The Evolution of Renewable Energy Policy in OECD Countries: Aggregate Indicators and Determinants," Working Papers, Fondazione Eni Enrico Mattei 2012.51, Fondazione Eni Enrico Mattei.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:udf:wpaper:201204. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alberto Benati).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.