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Lead Markets of Environmental Innovations: A Framework for Innovation and Environmental Economics

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  • Rennings, Klaus
  • Beise, Marian

Abstract

Environmental regulations often want to stimulate the generation and adoption of ecoefficient innovations. An important argument in the public debate is also the creation of new markets for environmentally benign products, processes and services that other countries adopt and therefore generate export opportunities for the pioneering country. The research so far concentrated on the question on how national environmental regulation can induce innovations. The question addressed in this paper is whether environmental regulations can create lead markets, enabling local firms to export innovations that are induced by local market conditions and national regulations. We identify relevant factors for lead markets of environmental innovations. So far, the lead market concept in innovation economics has only been applied to innovations in general. We extend the lead market model to environmentally friendly innovations, considering their peculiarities, in particular the public good character of environmental benefits and the role of regulations. The approach is applied to two case studies: fuel-efficient passenger cars and wind energy. In both cases, one country adopted the innovation first. Later, other countries followed the same innovation design favoured by the lead market. The lead market became a large exporter in the wind generation and car industry respectively. We discuss the regulations employed and the reasons for the international success of the innovations induced by them. We find that strict regulation has created lead markets when it was supported by a global demand or regulatory trend.

Suggested Citation

  • Rennings, Klaus & Beise, Marian, 2003. "Lead Markets of Environmental Innovations: A Framework for Innovation and Environmental Economics," ZEW Discussion Papers 03-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:898
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gosens, Jorrit & Lu, Yonglong & Coenen , Lars, 2013. "Clean-tech Innovation in Emerging Economies: Transnational Dimensions in Technological Innovation System Formation," Papers in Innovation Studies 2013/10, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    2. 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.
    3. Marian Beise & Thomas Cleff, 2003. "Assessing the Lead Market Potential of Countries for Innovation Projects," Discussion Paper Series 142, Research Institute for Economics & Business Administration, Kobe University.
    4. Marian Beise & Klaus Rennings, 2004. "National Environmental Policy and the Global Success of Next-Generation Automobiles," Discussion Paper Series 154, Research Institute for Economics & Business Administration, Kobe University.
    5. Trianni, Andrea & Cagno, Enrico & Worrell, Ernst, 2013. "Innovation and adoption of energy efficient technologies: An exploratory analysis of Italian primary metal manufacturing SMEs," Energy Policy, Elsevier, vol. 61(C), pages 430-440.
    6. Wiesenthal, Tobias & Condeço-Melhorado, Ana & Leduc, Guillaume, 2015. "Innovation in the European transport sector: A review," Transport Policy, Elsevier, vol. 42(C), pages 86-93.
    7. Verena L. Holzer, 2004. "Ecological Objectives and the Energy Sector - the German Renewable Energies Act and the European Emissions Trading System -," Volkswirtschaftliche Diskussionsbeiträge 63, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    8. 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.
    9. Tilmann Rave & Frank Goetzke, 2013. "Climate-friendly technologies in the mobile air-conditioning sector: a patent citation analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(4), pages 389-422, October.
    10. Marian Beise, 2003. "Lead Markets: Drivers of the Global Diffusion of Innovations," Discussion Paper Series 141, Research Institute for Economics & Business Administration, Kobe University.
    11. Steinhilber, Simone & Wells, Peter & Thankappan, Samarthia, 2013. "Socio-technical inertia: Understanding the barriers to electric vehicles," Energy Policy, Elsevier, vol. 60(C), pages 531-539.
    12. Schaffer, Axel & Düvelmeyer, Claudia, 2016. "Regional drivers of on-farm energy production in Bavaria," Energy Policy, Elsevier, vol. 95(C), pages 361-369.
    13. Jochem, Patrick & Schleich, Joachim, 2011. "Exploring the factors driving automotive exports in OECD countries," Working Papers "Sustainability and Innovation" S4/2011, Fraunhofer Institute for Systems and Innovation Research (ISI).
    14. Marian Beise, 2004. "Lead Markets, Innovation Differentials and Growth," Discussion Paper Series 157, Research Institute for Economics & Business Administration, Kobe University.
    15. Frohwein, Torsten, 2003. "Die Porter-Hypothese im Lichte der Neuordnung europäischer Chemikalienregulierung: Does it hold?," UFZ Discussion Papers 7/2003, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    16. Ziółkowsk Bożydar, 2012. "Effectitions as a new instrument in sustainable development policy – the conceptual approach," Management, De Gruyter Open, vol. 16(2), pages 282-295, December.
    17. Beise, Marian, 2004. "Lead markets: country-specific drivers of the global diffusion of innovations," Research Policy, Elsevier, vol. 33(6-7), pages 997-1018, September.
    18. Frank Goetzke & Tilmann Rave & Ursula Triebswetter, 2012. "Diffusion of environmental technologies: a patent citation analysis of glass melting and glass burners," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(2), pages 189-217, April.

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