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

Author

Listed:
  • Rik Rozendaal
  • Herman Vollebergh

Abstract

This article analyzes the effects of fuel economy and greenhouse gas emission standards on the direction of innovation. We develop an intuitive measure of standard stringency that captures the policy’s most important attributes for the incentive to innovate. To test the role of standards, prices, and taxes for the innovation decision, 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 robust driver inducing zero emission technologies in the car market, while taxes also play a role. The effect of standards is driven by patenting for electric vehicle and hydrogen fuel cell technologies. We find no evidence that these policies negatively impact dirty innovation.

Suggested Citation

  • Rik Rozendaal & Herman Vollebergh, 2025. "Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 12(3), pages 565-598.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/731834
    DOI: 10.1086/731834
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    Cited by:

    1. RENTOCCHINI Francesco & VEZZANI Antonio & MONTRESOR Sandro, 2024. "Walking the Green Line: Government Sponsored R&D and Clean Technologies," JRC Working Papers on Corporate R&D and Innovation 2023-01, Joint Research Centre.
    2. Vollebergh, Herman & van der Werf, Edwin & Vogel, Johanna, 2023. "A descriptive framework to evaluate instrument packages for the low-carbon transition," Ecological Economics, Elsevier, vol. 205(C).
    3. Tingmingke Lu, 2025. "Maximum Hallucination Standards for Domain-Specific Large Language Models," Papers 2503.05481, arXiv.org.
    4. Yang, Yubeen & Park, Sungwook, 2025. "Effects of compression ratio on combustion characteristics in a six-stroke spark-ignition engine using water direct injection," Energy, Elsevier, vol. 335(C).
    5. Grégoire-Zawilski, Myriam & Popp, David, 2024. "Do technology standards induce innovation in environmental technologies when coordination is important?," Research Policy, Elsevier, vol. 53(1).
    6. Siyu Feng, 2024. "Do market-based environmental policies encourage innovation in energy storage?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(3), pages 673-713, July.
    7. Eugenie Dugoua & Jacob Moscona, 2025. "The Economics of Climate Innovation: Technology, Climate Policy, and the Clean Energy Transition," CESifo Working Paper Series 12267, CESifo.
    8. Bagayev, Igor & Kogler, Dieter F. & Lochard, Julie, 2025. "Does environmental regulation drive specialisation in green innovation?," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    9. Eugenie Dugoua & Jacob Moscona, 2025. "The Economics of climate innovation: technology, climate policy, and the clean energy transition," CEP Discussion Papers dp2135, Centre for Economic Performance, LSE.

    More about this item

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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