Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme
Jung Youn Mo and
Wooyoung Jeon (wyjeon@jnu.ac.kr)
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Jung Youn Mo: Department of Economics, Chosun University, Gwangju 61452, Republic of Korea
Wooyoung Jeon: Department of Economics, Chonnam National University, Gwangju 61186, Republic of Korea
Energies, 2024, vol. 17, issue 23, 1-12
Abstract:
To cope with radical global environmental regulation, it is necessary to find efficient ways to decrease carbon emissions with a low burden on firms and to design valid policies for a sustainable economy. This study investigates the link between the carbon emissions market and firms’ innovation activities and examines the impact of R&D investment caused by the carbon emissions market on the financial performance of firms participating in the Korean Emission Trading Scheme (KETS). This study assumes that a well-designed carbon emissions market can amplify the effect of R&D investment on improving the financial performance of firms and tests the efficiency of this market based on the KETS data. The results show that the indirect R&D elasticity that affects financial performance is simultaneously negative in the short and long run, except in Phase 1 (2015–2018). From this result, this study concludes that the carbon emissions market cannot induce technological innovation to increase financial performance in Korea, and the dynamic efficiency of the market is low. The industry comparison results confirm that the emissions market has a statistically significant effect on financial performance only in carbon-intensive industries. This study thus shows that the impact of technological innovation induced by the carbon emissions market varies depending on industrial characteristics.
Keywords: financial performance; carbon emissions; innovation; dynamic panel GMM; manufacturing industry (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:17:y:2024:i:23:p:6049-:d:1534653
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