The effect of climate policy on innovation and economic performance along the supply chain: A firm- and sector-level analysis

Antoine Dechezleprêtre and Tobias Kruse

No 189, OECD Environment Working Papers from OECD Publishing

Abstract: The paper empirically assesses the effect of climate policy stringency on innovation and economic performance, both directly on regulated sectors and indirectly through supply chain relationships. The analysis is based on a combination of firm- and sector-level data, covering 19 countries and the period from 1990 to 2015. The paper shows that climate policies are effective at inducing innovation in low-carbon technologies in directly regulated sectors. It does not find evidence that climate policies induce significant innovation along the supply chain. In addition, there is no evidence that climate policies – through the channel of clean innovation – either harm or improve the economic performance of regulated firms. This supports the evidence that past climate policies have not been major burdens on firms’ competitiveness, and that clean innovation may enable firms to compensate for the potential costs implied by new environmental regulations.

Keywords: Firm performance; Low carbon innovation; Policy evaluation; Porter Hypothesis (search for similar items in EconPapers)
JEL-codes: L25 O38 Q55 Q58 (search for similar items in EconPapers)
Date: 2022-02-15
New Economics Papers: this item is included in nep-agr, nep-eff, nep-ene, nep-env, nep-ino, nep-sbm and nep-tid
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:envaaa:189-en

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