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Does foreign environmental policy influence domestic innovation?: evidence from the wind industry

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  • Dechezlepretre, Antoine
  • Glachant, Matthieu

Abstract

This paper analyses the relative influence of domestic and foreign demand-pull policies in wind power across OECD countries on the rate of innovation in this technology. We use annual wind power generation to capture the stringency of the portfolio of demand-pull policies in place (e.g., guaranteed tariffs, investment and production tax credits), and patent data as an indicator of innovation activity. We find that wind technology improvements respond positively to policies both home and abroad, but the marginal effect of domestic policies is 12 times greater. The influence of foreign polices is reduced by barriers to technology diffusion, in particular lax intellectual property rights. Reducing such barriers therefore constitutes a powerful policy leverage for boosting environmental innovation globally.

Suggested Citation

  • Dechezlepretre, Antoine & Glachant, Matthieu, 2014. "Does foreign environmental policy influence domestic innovation?: evidence from the wind industry," LSE Research Online Documents on Economics 58155, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:58155
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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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