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End-of-Pipe or Cleaner Production? An Empirical Comparison of Environmental Innovation Decisions Across OECD Countries

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  • Frondel, Manuel
  • Horbach, Jens
  • Rennings, Klaus

Abstract

While both fundamental types of abatement measures mitigate the adverse environmental impacts of production, cleaner production technologies are frequently more advantageous than end-of-pipe technologies for environmental and economic reasons. This paper analyzes a variety of factors that might enhance firms? propensity to implement cleaner products and production technologies instead of end-of-pipe technologies. On the basis of a unique facility-level data set derived from a recent OECD survey, we find a clear dominance of cleaner production in seven OECD countries: Surprisingly, 76.8% of the facilities report that they invest predominantly in cleaner production technologies. With regard to environmental product innovations, the large majority of facilities reports that the measures they have undertaken to reduce environmental impacts were geared at production processes and not so much at products. Our estimation results are based on multinomial logit models which indicate that regulatory measures and the stringency of environmental policies are positively correlated with end-of-pipe technologies, while cost savings, general management systems, and specific environmental management tools tend to favor clean production. We conclude that improvements towards cleaner products and production may be reached by the continuous development and wider diffusion of these management tools. Improvements may also be stimulated by widening the cost gap between the two types of technologies, for instance, by additionally charging for waste and energy use.

Suggested Citation

  • Frondel, Manuel & Horbach, Jens & Rennings, Klaus, 2004. "End-of-Pipe or Cleaner Production? An Empirical Comparison of Environmental Innovation Decisions Across OECD Countries," ZEW Discussion Papers 04-82, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:2887
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    References listed on IDEAS

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    Cited by:

    1. Vanessa Oltra & Rene Kemp & Frans P. De Vries, 2010. "Patents as a measure for eco-innovation," International Journal of Environmental Technology and Management, Inderscience Enterprises Ltd, vol. 13(2), pages 130-148.
    2. Paul Lanoie & Jérémy Laurent‐Lucchetti & Nick Johnstone & Stefan Ambec, 2011. "Environmental Policy, Innovation and Performance: New Insights on the Porter Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 803-842, September.
    3. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, Elsevier.
    4. Vona, Francesco & Patriarca, Fabrizio, 2011. "Income inequality and the development of environmental technologies," Ecological Economics, Elsevier, vol. 70(11), pages 2201-2213, September.
    5. repec:wfo:wstudy:27460 is not listed on IDEAS
    6. Christian Le Bas & Nicolas Poussing, 2013. "Firm voluntary measures for environmental changes, eco-innovations and CSR : Empirical analysis based on data surveys," Working Papers 1322, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    7. Rogge, Karoline S. & Schneider, Malte & Hoffmann, Volker H., 2010. "The innovation impact of EU emission trading: findings of company case studies in the German power sector," Working Papers "Sustainability and Innovation" S2/2010, Fraunhofer Institute for Systems and Innovation Research (ISI).
    8. Klaus Rennings & Christian Rammer, 2011. "The Impact of Regulation-Driven Environmental Innovation on Innovation Success and Firm Performance," Industry and Innovation, Taylor & Francis Journals, vol. 18(3), pages 255-283.
    9. Fujii, Hidemichi & Iwata, Kazuyuki & Kaneko, Shinji & Managi, Shunsuke, 2012. "Corporate environmental and economic performances of Japanese manufacturing firms: Empirical study for sustainable development," MPRA Paper 39564, University Library of Munich, Germany.
    10. Fujii, Hidemichi & Managi, Shunsuke, 2012. "Decomposition of toxic chemical substance management in three U.S. manufacturing sectors from 1991 to 2008," MPRA Paper 37550, University Library of Munich, Germany.
    11. Tilmann Rave & Frank Goetzke & Mario Larch, 2011. "The Determinants of Environmental Innovations and Patenting: Germany Reconsidered," ifo Working Paper Series 97, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    12. Christin, Clémence & Nicolai, Jean-Philippe & Pouyet, Jerome, 2011. "The role of abatement technologies for allocating free allowances," DICE Discussion Papers 34, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    13. Francesco Vona & Francesco Nicolli & Lionel Nesta, 2012. "Determinants of renewable energy innovation: environmental policies vs. market regulation," Sciences Po publications 2012-05, Sciences Po.
    14. Demirel, Pelin & Kesidou, Effie, 2011. "Stimulating different types of eco-innovation in the UK: Government policies and firm motivations," Ecological Economics, Elsevier, vol. 70(8), pages 1546-1557, June.
    15. Vanessa OLTRA (GREThA UMR CNRS 5113), 2008. "Environmental innovation and industrial dynamics: the contributions of evolutionary economics," Cahiers du GREThA 2008-28, Groupe de Recherche en Economie Théorique et Appliquée.
    16. Massimiliano Mazzanti & Giulio Cainelli & Roberto Zoboli, 2008. "The Relationship Between Environmental Efficiency and Manufacturing Firm’s Growth," Working Papers 2008.99, Fondazione Eni Enrico Mattei.
    17. Apergis, Nicholas & Eleftheriou, Sofia & Payne, James E., 2013. "The relationship between international financial reporting standards, carbon emissions, and R&D expenditures: Evidence from European manufacturing firms," Ecological Economics, Elsevier, vol. 88(C), pages 57-66.
    18. Rennings, Klaus & Rexhäuser, Sascha, 2010. "Long-term impacts of environmental policy and eco-innovative activities of firms," ZEW Discussion Papers 10-074, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    19. Jens Horbach, 2006. "Determinants of Environmental Innovation – New Evidence from German Panel Data Sources," Working Papers 2006.13, Fondazione Eni Enrico Mattei.
    20. Hammar, Henrik & Löfgren, Åsa, 2007. "Explaining adoption of end of pipe solutions and clean technologies," Working Papers 102, National Institute of Economic Research.
    21. Vanessa OLTRA & Maïder SAINT JEAN, 2009. "Environmental Innovations and Industrial Dynamics (In French)," Cahiers du GREThA 2009-22, Groupe de Recherche en Economie Théorique et Appliquée.
    22. Abdelillah Hamdouch & Marc-Hubert Depret, 2010. "Policy integration strategy and the development of the 'green economy': foundations and implementation patterns," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 53(4), pages 473-490.
    23. del Río González, Pablo, 2009. "The empirical analysis of the determinants for environmental technological change: A research agenda," Ecological Economics, Elsevier, vol. 68(3), pages 861-878, January.
    24. Hattori, Keisuke, 2011. "Optimal Environmental Policy under Monopolistic Provision of Clean Technologies," MPRA Paper 28837, University Library of Munich, Germany.

    More about this item

    Keywords

    Cleaner production; end-of-pipe-technologies; technological innovation; technological change; government policy; discrete choice models;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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