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Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out?

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  • Hanna Hottenrott
  • Sascha Rexhäuser

Abstract

Substantial policy effort is devoted to stimulate environmentally friendly technology through regulation and subsidies. Since innovation is a crucial productivity driver, a potential crowding out of inventive efforts in affected firms may increase the cost of regulation. We study the effects of regulation-induced environmental technology on innovation activities for a sample of firms in Germany. We find some evidence for a crowding out of firms' in-house R&D, especially for firms facing financing constraints. Innovation outcomes and investments in innovation-related fixed assets are not affected. Moreover, subsidy-backed environmental technology does not crowd out R&D.

Suggested Citation

  • Hanna Hottenrott & Sascha Rexhäuser, 2015. "Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out?," Industry and Innovation, Taylor & Francis Journals, vol. 22(5), pages 375-401, July.
  • Handle: RePEc:taf:indinn:v:22:y:2015:i:5:p:375-401
    DOI: 10.1080/13662716.2015.1064255
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    Cited by:

    1. repec:oup:renvpo:v:11:y:2017:i:2:p:183-206. is not listed on IDEAS
    2. Hottenrott, Hanna & Rexhäuser, Sascha & Veugelers, Reinhilde, 2016. "Organisational change and the productivity effects of green technology adoption," Resource and Energy Economics, Elsevier, vol. 43(C), pages 172-194.
    3. Francesco Vona & Giovanni Marin & Davide Consoli & David Popp, 2018. "Environmental Regulation and Green Skills: An Empirical Exploration," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(4), pages 713-753.
    4. Barbieri, Nicolò, 2016. "Fuel prices and the invention crowding out effect: Releasing the automotive industry from its dependence on fossil fuel," Technological Forecasting and Social Change, Elsevier, vol. 111(C), pages 222-234.
    5. repec:taf:indinn:v:23:y:2016:i:7:p:625-646 is not listed on IDEAS
    6. Nicolò Barbieri, 2015. "Environmental policy and invention crowding out. Unlocking the automotive industry from fossil fuel path dependence," SEEDS Working Papers 0615, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Mar 2015.
    7. Jens Horbach, 2016. "Impacts of regulation on eco-innovation and job creation," IZA World of Labor, Institute for the Study of Labor (IZA), pages 265-265, June.

    More about this item

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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