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Policy-induced environmental technology and incentive efforts: Is there a crowding out?

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  • Hottenrott, Hanna
  • Rexhäuser, Sascha

Abstract

Significant policy effort is devoted to stimulate the development, adoption and diffusion of environmentally-friendly technology. Sceptics worry about the effects of regulation-induced environmental technology on firms' competitiveness. Since innovation is a crucial productivity driver, a potential crowding out of inventive efforts could increase the cost of mitigating environmental damage. Using matching techniques, we study the short-term effects of regulation-induced environmental technology on non-green innovative activities for a sample of firms in Germany. We find indeed some evidence for a crowding out of the firms' in-house R&D. The estimated treatment effect is larger for firms that are likely to face financing constraints. However, we do not find negative effects on the number of ongoing R&D projects, investments in innovation-related fixed assets or on the outcome of innovation projects. Likewise, for firms with subsidy-backed environmental innovations no crowding out is found.

Suggested Citation

  • Hottenrott, Hanna & Rexhäuser, Sascha, 2013. "Policy-induced environmental technology and incentive efforts: Is there a crowding out?," ZEW Discussion Papers 13-115, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:13115
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    Cited by:

    1. repec:oup:renvpo:v:11:y:2017:i:2:p:183-206. is not listed on IDEAS
    2. Barbieri, Nicolò, 2016. "Fuel prices and the invention crowding out effect: Releasing the automotive industry from its dependence on fossil fuel," Technological Forecasting and Social Change, Elsevier, vol. 111(C), pages 222-234.
    3. Hottenrott, Hanna & Rexhäuser, Sascha & Veugelers, Reinhilde, 2016. "Organisational change and the productivity effects of green technology adoption," Resource and Energy Economics, Elsevier, vol. 43(C), pages 172-194.
    4. Nicolò Barbieri, 2015. "Environmental policy and invention crowding out. Unlocking the automotive industry from fossil fuel path dependence," SEEDS Working Papers 0615, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Mar 2015.
    5. Jens Horbach, 2016. "Impacts of regulation on eco-innovation and job creation," IZA World of Labor, Institute for the Study of Labor (IZA), pages 265-265, June.
    6. Francesco Vona & Giovanni Marin & Davide Consoli & David Popp, 2018. "Environmental regulation and green skills : an empirical exploration," Sciences Po publications info:hdl:2441/1fkb59dcsg9, Sciences Po.

    More about this item

    Keywords

    Environmental Policy; Regulation; R&D; Technological Change; Innovation; Crowding Out;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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