IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-05014132.html
   My bibliography  Save this paper

Does environmental regulation drive specialisation in green innovation?
[La réglementation environnementale favorise-t-elle la spécialisation dans l'innovation verte ?]

Author

Listed:
  • Igor Bagayev

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel, UCD - University College Dublin [Dublin])

  • Dieter Kogler

    (UCD - University College Dublin [Dublin])

  • Julie Lochard

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel, UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We examine the response of technological change to one of the major environmental regulations in the European Union (EU) – the Ambient Air Quality Directive (AAQD). Our identification strategy exploits the structure of this directive, which imposes air quality measures in regions exceeding pollutant concentration limits. We implement a quasi difference-in-differences strategy and test for the effect of environmental measures on innovation in 654 technology classes at the EU region (NUTS-2) level over the 1999–2015 period. We show that AAQD environmental measures drive the specialisation of regions in green technologies. We find a positive effect for patents in the two most prevailing green technology classes, i.e., clean energy and industrial processes, as well as evidence of spatial leakage.

Suggested Citation

  • Igor Bagayev & Dieter Kogler & Julie Lochard, 2025. "Does environmental regulation drive specialisation in green innovation? [La réglementation environnementale favorise-t-elle la spécialisation dans l'innovation verte ?]," Post-Print hal-05014132, HAL.
    • Handle: RePEc:hal:journl:hal-05014132
    DOI: 10.1016/j.jeem.2024.103101
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Greenstone & Rema Hanna, 2014. "Environmental Regulations, Air and Water Pollution, and Infant Mortality in India," American Economic Review, American Economic Association, vol. 104(10), pages 3038-3072, October.
    2. Daron Acemoglu & Amy Finkelstein, 2008. "Input and Technology Choices in Regulated Industries: Evidence from the Health Care Sector," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 837-880, October.
    3. Dieter F. Kogler & Jürgen Essletzbichler & David L. Rigby, 2017. "The evolution of specialization in the EU15 knowledge space," Journal of Economic Geography, Oxford University Press, vol. 17(2), pages 345-373.
    4. Fernando Broner & Paula Bustos & Vasco Carvalho, 2011. "Sources of comparative advantage in polluting industries," Economics Working Papers 1331, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2019.
    5. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    6. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    7. Paulo Guimarães & Pedro Portugal, 2010. "A simple feasible procedure to fit models with high-dimensional fixed effects," Stata Journal, StataCorp LLC, vol. 10(4), pages 628-649, December.
    8. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    9. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 873-937, Elsevier.
    10. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    11. repec:fth:harver:1473 is not listed on IDEAS
    12. Claire Brunel & Arik Levinson, 2013. "Measuring Environmental Regulatory Stringency," Working Papers gueconwpa~13-13-02, Georgetown University, Department of Economics.
    13. Matthew Gibson, 2019. "Regulation-Induced Pollution Substitution," The Review of Economics and Statistics, MIT Press, vol. 101(5), pages 827-840, December.
    14. Rema Hanna, 2010. "US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 158-189, July.
    15. Audretsch, David B. & Feldman, Maryann P., 2004. "Knowledge spillovers and the geography of innovation," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 61, pages 2713-2739, Elsevier.
    16. W. Reed Walker, 2011. "Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act," American Economic Review, American Economic Association, vol. 101(3), pages 442-447, May.
    17. 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, vol. 51(1), pages 46-71, January.
    18. Antonio Bento & Matthew Freedman & Corey Lang, 2015. "Who Benefits from Environmental Regulation? Evidence from the Clean Air Act Amendments," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 610-622, July.
    19. Matthew Blackwell & Stefano Iacus & Gary King & Giuseppe Porro, 2009. "cem: Coarsened exact matching in Stata," Stata Journal, StataCorp LLC, vol. 9(4), pages 524-546, December.
    20. David Popp, 2019. "Environmental Policy and Innovation: A Decade of Research," NBER Working Papers 25631, National Bureau of Economic Research, Inc.
    21. repec:clg:wpaper:2008-02 is not listed on IDEAS
    22. Barbieri, Nicolò, 2015. "Investigating the impacts of technological position and European environmental regulation on green automotive patent activity," Ecological Economics, Elsevier, vol. 117(C), pages 140-152.
    23. Pamela Jakiela, 2021. "Simple Diagnostics for Two-Way Fixed Effects," Department of Economics Working Papers 2021-05, Department of Economics, Williams College.
    24. Davide Antonioli & Simone Borghesi & Massimiliano Mazzanti, 2016. "Are regional systems greening the economy? Local spillovers, green innovations and firms’ economic performances," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(7), pages 692-713, October.
    25. Clément de Chaisemartin & Xavier D’Haultfœuille, 2023. "Two-way fixed effects and differences-in-differences with heterogeneous treatment effects: a survey," The Econometrics Journal, Royal Economic Society, vol. 26(3), pages 1-30.
    26. Daron Acemoglu, 2002. "Directed Technical Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 781-809.
    27. Raphael Calel, 2020. "Adopt or Innovate: Understanding Technological Responses to Cap-and-Trade," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 170-201, August.
    28. Antoine Dechezleprêtre & Matthieu Glachant & Ivan Haščič & Nick Johnstone & Yann Ménière, 2011. "Invention and Transfer of Climate Change--Mitigation Technologies: A Global Analysis," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 109-130, Winter.
    29. Raphael Calel & Antoine Dechezleprêtre, 2016. "Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 173-191, March.
    30. Bagayev, Igor & Lochard, Julie, 2017. "EU air pollution regulation: A breath of fresh air for Eastern European polluting industries?," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 145-163.
    31. 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.
    32. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    33. David Popp, 2019. "Environmental policy and innovation: a decade of research," CESifo Working Paper Series 7544, CESifo.
    34. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 941-975.
    35. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    36. Janet Currie & Reed Walker, 2019. "What Do Economists Have to Say about the Clean Air Act 50 Years after the Establishment of the Environmental Protection Agency?," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 3-26, Fall.
    37. Chan, H. Ron & Zhou, Yichen Christy, 2021. "Regulatory spillover and climate co-benefits: Evidence from New Source Review lawsuits," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    38. Ambec, Stefan & Coria, Jessica, 2018. "Policy spillovers in the regulation of multiple pollutants," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 114-134.
    39. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
    40. Popp, David, 2019. "Environmental Policy and Innovation: A Decade of Research," International Review of Environmental and Resource Economics, now publishers, vol. 13(3-4), pages 265-337, September.
    41. Iacus, Stefano & King, Gary & Porro, Giuseppe, 2009. "cem: Software for Coarsened Exact Matching," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 30(i09).
    42. Clarke, Damian, 2017. "Estimating Difference-in-Differences in the Presence of Spillovers," MPRA Paper 81604, University Library of Munich, Germany.
    43. Wancong Fu & Chong Li & Jan Ondrich & David Popp, 2018. "Technological Spillover Effects of State Renewable Energy Policy: Evidence from Patent Counts," NBER Working Papers 25390, National Bureau of Economic Research, Inc.
    44. Michael L Anderson, 2020. "As the Wind Blows: The Effects of Long-Term Exposure to Air Pollution on Mortality," Journal of the European Economic Association, European Economic Association, vol. 18(4), pages 1886-1927.
    45. Michael Greenstone, 2002. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1175-1219, December.
    46. David Hémous & Morten Olsen, 2021. "Directed Technical Change in Labor and Environmental Economics," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 571-597, August.
    47. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    48. Ivan Haščič & Mauro Migotto, 2015. "Measuring environmental innovation using patent data," OECD Environment Working Papers 89, OECD Publishing.
    49. Yann Ménière & Antoine Dechezleprêtre & Matthieu Glachant & Ivan Hascic & N. Johnstone, 2011. "Invention and transfer of climate change mitigation technologies: a study drawing on patent data," Post-Print hal-00869795, HAL.
    50. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    51. Veugelers, Reinhilde, 2012. "Which policy instruments to induce clean innovating?," Research Policy, Elsevier, vol. 41(10), pages 1770-1778.
    52. Costantini, Valeria & Crespi, Francesco & Palma, Alessandro, 2017. "Characterizing the policy mix and its impact on eco-innovation: A patent analysis of energy-efficient technologies," Research Policy, Elsevier, vol. 46(4), pages 799-819.
    53. Antoine Dechezleprêtre & Matthieu Glachant & Ivan Haščič & Nick Johnstone & Yann Ménière, 2011. "Invention and Transfer of Climate Change--Mitigation Technologies: A Global Analysis," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 109-130, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jingbo Cui & Zhenxuan Wang & Haishan Yu, 2022. "Can International Climate Cooperation Induce Knowledge Spillover to Developing Countries? Evidence from CDM," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(4), pages 923-951, August.
    2. David Popp, 2019. "Environmental policy and innovation: a decade of research," CESifo Working Paper Series 7544, CESifo.
    3. 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.
    4. Liu, Yinan & Lv, Peiyao & Zhao, Hao, 2024. "Green innovation through trade: The impact of European Union emissions trading scheme on Chinese exporters," Journal of International Money and Finance, Elsevier, vol. 149(C).
    5. Li, Kai & Yan, Yaxue & Zhang, Xiaoling, 2021. "Carbon-abatement policies, investment preferences, and directed technological change: Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    6. Gregory Casey, 2024. "Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 192-228.
    7. Massimiliano Mazzanti & Antonio Musolesi, 2020. "Modeling Green Knowledge Production and Environmental Policies with Semiparametric Panel Data Regression models," SEEDS Working Papers 1420, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Sep 2020.
    8. Feng, Siyu & Lazkano, Itziar, 2022. "Innovation trends in electricity storage: What drives global innovation?," Energy Policy, Elsevier, vol. 167(C).
    9. Huangfu, Jianhua & Wei, Weixian & Yu, Lei & Li, Guoliang, 2025. "The impact of environmental policy stringency and oil prices on innovation: Evidence from the new energy vehicle industry in China," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 979-996.
    10. Ribeiro, Beatriz Couto & Ferrero, Luciane Graziele Pereira & Bin, Adriana & Blind, Knut, 2023. "Effects of innovation stimuli regulation in the electricity sector: A quantitative study on European countries," Energy Economics, Elsevier, vol. 118(C).
    11. Grégoire-Zawilski, Myriam & Popp, David, 2024. "Do technology standards induce innovation in environmental technologies when coordination is important?," Research Policy, Elsevier, vol. 53(1).
    12. Brehm, Johannes & aus dem Moore, Nils & Gruhl, Henri, 2022. "Driving Innovation? – Carbon Tax Effects in the Swedish Transport Sector," VfS Annual Conference 2022 (Basel): Big Data in Economics 264085, Verein für Socialpolitik / German Economic Association.
    13. Li, Kai & Qi, Shouzhou & Shi, Xunpeng, 2023. "Environmental policies and low-carbon industrial upgrading: Heterogenous effects among policies, sectors, and technologies in China," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    14. Barbieri, Nicolò & Marzucchi, Alberto & Rizzo, Ugo, 2023. "Green technologies, interdependencies, and policy," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    15. Dong, Zhaoyingzi & Liu, Haijing & Zhang, Weiwen, 2024. "The effect of information disclosure on low-carbon innovation," Energy, Elsevier, vol. 288(C).
    16. Herman, Kyle S. & Xiang, Jun, 2019. "Induced innovation in clean energy technologies from foreign environmental policy stringency?," Technological Forecasting and Social Change, Elsevier, vol. 147(C), pages 198-207.
    17. Garsous, Grégoire & Worack, Stephan, 2022. "Technological expertise as a driver of environmental technology diffusion through trade: Evidence from the wind turbine manufacturing industry," Energy Policy, Elsevier, vol. 162(C).
    18. Hu, Hui & Qi, Shaozhou & Chen, Yuanzhi, 2023. "Using green technology for a better tomorrow: How enterprises and government utilize the carbon trading system and incentive policies," China Economic Review, Elsevier, vol. 78(C).
    19. Cameron Hepburn & Jacquelyn Pless & David Popp, 2018. "Policy Brief—Encouraging Innovation that Protects Environmental Systems: Five Policy Proposals," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 154-169.
    20. Antonio Musolesi & Davide Golinelli & Massimiliano Mazzanti, 2025. "Modelling green knowledge production and environmental policies with semiparametric panel data regression models," Empirical Economics, Springer, vol. 68(1), pages 327-352, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-05014132. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.