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The Effect of Within-Sector, Upstream and Downstream Energy Taxes on Innovation and Productivity

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  • Franco, Chiara
  • Marin, Giovanni

Abstract

The aim of the paper is to investigate the effect of environmental stringency on innovation and productivity using a cross-country panel made up of 7 European countries for 13 manufacturing sectors over the years 2001-2007. This research topic goes under the heading of Porter Hypothesis (PH) of which different versions have been tested. We take into consideration both the strong and the weak versions while adding some peculiarities to the analysis. Firstly, we assess the role played by a specific environmental regulation, that is energy taxes, that have rarely been empirically tested as factors that can favour PH hypothesis to be verified. Secondly, we do not consider, within the same framework, only the effect of energy taxes in the same sector (within-sector), but also the role played by energy taxes in upstream and downstream sectors in terms of input-output relationship. Thirdly, we test these relationships also “indirectly” by verifying whether innovation can be one of the channels through which higher sectoral productivity can be reached. The main findings suggest that downstream stringency is the most relevant driver for innovation and that most of the effect of regulation on productivity is direct, while the part of the effect mediated by induced innovation is not statistically significant.

Suggested Citation

  • Franco, Chiara & Marin, Giovanni, 2013. "The Effect of Within-Sector, Upstream and Downstream Energy Taxes on Innovation and Productivity," Energy: Resources and Markets 162419, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemer:162419
    DOI: 10.22004/ag.econ.162419
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    Cited by:

    1. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    2. Xinfei Li & Baodong Cheng & Qiling Hong & Chang Xu, 2021. "Can a Win–Win Situation of Economy and Environment Be Achieved in Cities by the Government’s Environmental Regulations?," Sustainability, MDPI, vol. 13(11), pages 1-20, May.
    3. Massimiliano Mazzanti & Giovanni Marin & Susanna Mancinelli & Francesco Nicolli, 2015. "Carbon dioxide reducing environmental innovations, sector upstream/downstream integration and policy: evidence from the EU," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(4), pages 709-735, November.
    4. Xinfei Li & Chang Xu & Baodong Cheng & Jingyang Duan & Yueming Li, 2021. "Does Environmental Regulation Improve the Green Total Factor Productivity of Chinese Cities? A Threshold Effect Analysis Based on the Economic Development Level," IJERPH, MDPI, vol. 18(9), pages 1-21, April.
    5. Peng, Jiaying & Xie, Rui & Ma, Chunbo & Fu, Yang, 2021. "Market-based environmental regulation and total factor productivity: Evidence from Chinese enterprises," Economic Modelling, Elsevier, vol. 95(C), pages 394-407.
    6. Marianna Gilli, 2016. "Towards a low carbon Europe: the role of technological change and environmental policies in European manufacturing sectors," SEEDS Working Papers 0516, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Apr 2016.
    7. Juqiu Deng & Jiayu Yang & Zhenyu Liu & Qingyang Tan, 2023. "Environmental protection tax and green innovation of heavily polluting enterprises: A quasi-natural experiment based on the implementation of China’s environmental protection tax law," PLOS ONE, Public Library of Science, vol. 18(6), pages 1-19, June.
    8. Wang, Yan & Shen, Neng, 2016. "Environmental regulation and environmental productivity: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 758-766.
    9. Xie, Rong-hui & Yuan, Yi-jun & Huang, Jing-jing, 2017. "Different Types of Environmental Regulations and Heterogeneous Influence on “Green” Productivity: Evidence from China," Ecological Economics, Elsevier, vol. 132(C), pages 104-112.
    10. Lorena D’Agostino, 2015. "How MNEs respond to environmental regulation: integrating the Porter hypothesis and the pollution haven hypothesis," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(2), pages 245-269, August.

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    Keywords

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    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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