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Policy-induced environmental technology and incentive efforts: Is there a crowding out?

Hanna Hottenrott () and Sascha Rexhäuser

No 13-115, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Significant policy effort is devoted to stimulate the development, adoption and diffusion of environmentally-friendly technology. Sceptics worry about the effects of regulation-induced environmental technology on firms' competitiveness. Since innovation is a crucial productivity driver, a potential crowding out of inventive efforts could increase the cost of mitigating environmental damage. Using matching techniques, we study the short-term effects of regulation-induced environmental technology on non-green innovative activities for a sample of firms in Germany. We find indeed some evidence for a crowding out of the firms' in-house R&D. The estimated treatment effect is larger for firms that are likely to face financing constraints. However, we do not find negative effects on the number of ongoing R&D projects, investments in innovation-related fixed assets or on the outcome of innovation projects. Likewise, for firms with subsidy-backed environmental innovations no crowding out is found.

Keywords: Environmental Policy; Regulation; R&D; Technological Change; Innovation; Crowding Out (search for similar items in EconPapers)
JEL-codes: Q32 Q33 Q55 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-env, nep-ino, nep-ppm, nep-res, nep-sbm and nep-tid
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https://www.econstor.eu/bitstream/10419/88691/1/775222119.pdf (application/pdf)

Related works:
Journal Article: Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out? (2015) Downloads
Working Paper: Policy-induced environmental technology and inventive efforts: Is there a crowding out? (2013) Downloads
Working Paper: Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out? (2013) Downloads
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