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Environmental and Innovation Performance in a Dynamic Impure Public Good Framework

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  • Massimiliano Mazzanti

    ()

  • Valeria Costantini
  • Susanna Mancinelli

    ()

  • Massimilano Corradini

Abstract

We model investment decisions regarding innovation and emissions abatement in a dynamic theoretical framework. Considering knowledge stock as an impure public good, we study the reaction function between one representative agent’s investments in innovation and the other agents’ investments in the public characteristic of the impure public good. We demonstrate that the reaction function has a positive slope under general conditions and that its sensitiveness is affected by assumptions on the elasticity of substitution in the benefit function. The positivity of the reaction function is then empirically tested in an econometric estimation. We exploit an original sector-based database by gathering innovation efforts as well as polluting emissions and economic dimensions over the time span 1996-2005 for 15 European countries and 23 manufacturing sectors. Empirical results show that sector-based innovation investment is positively driven by the public characteristics provided by other sectors. Different reactivity strength for different polluting emissions also allows us to disclose the role of complementarity in agents’ decisions.

Suggested Citation

  • Massimiliano Mazzanti & Valeria Costantini & Susanna Mancinelli & Massimilano Corradini, 2011. "Environmental and Innovation Performance in a Dynamic Impure Public Good Framework," Working Papers 201117, University of Ferrara, Department of Economics.
  • Handle: RePEc:udf:wpaper:201117
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    Cited by:

    1. Ghisetti, Claudia & Marzucchi, Alberto & Montresor, Sandro, 2015. "The open eco-innovation mode. An empirical investigation of eleven European countries," Research Policy, Elsevier, vol. 44(5), pages 1080-1093.
    2. Michael Finus & Dirk Rübbelke, 2013. "Public Good Provision and Ancillary Benefits: The Case of Climate Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 211-226, October.

    More about this item

    Keywords

    impure public goods; environmental externalities; innovation spillovers;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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