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The impact of environmental regulation on technology diusion and innovations is studied using a unique data set of German residential buildings. We analyze how energy eciency regulations, in terms of minimum standards, aects energy-use in newly constructed buildings and how it induces innovation in the residential-building industry. The data used consists of a large sample of German apartment houses built between 1950 and 2005. Based on this information, we determine their real energy requirements from energy performance certicates and energy billing information. We develop a new measure for regulation intensity and apply a panel-error-correction regression model to energy requirements of low and high quality housing. Our

Regulation, Innovation and Technology Diffusion: Evidence from Building Energy Efficiency Standards in Germany