Does environmental regulation drive specialisation in green innovation?

Igor Bagayev, Dieter F. Kogler and Julie Lochard

Journal of Environmental Economics and Management, 2025, vol. 130, issue C

Abstract: We examine the response of technological change to one of the major environmental regulations in the European Union (EU) – the Ambient Air Quality Directive (AAQD). Our identification strategy exploits the structure of this directive, which imposes air quality measures in regions exceeding pollutant concentration limits. We implement a quasi difference-in-differences strategy and test for the effect of environmental measures on innovation in 654 technology classes at the EU region (NUTS-2) level over the 1999–2015 period. We show that AAQD environmental measures drive the specialisation of regions in green technologies. We find a positive effect for patents in the two most prevailing green technology classes, i.e., clean energy and industrial processes, as well as evidence of spatial leakage.

Keywords: Environmental regulation; Green innovation; Air pollution; Patents (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:130:y:2025:i:c:s009506962400175x

DOI: 10.1016/j.jeem.2024.103101

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