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Can Direct Regulations Spur Innovations in Environmental Technologies? A Study on Firm‐Level Patenting
Author(s) -
Klemetsen Marit E.,
Bye Brita,
Raknerud Arvid
Publication year - 2018
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12201
Subject(s) - norwegian , control (management) , class (philosophy) , economics , environmental regulation , panel data , spur , public economics , industrial organization , econometrics , business , computer science , engineering , philosophy , linguistics , management , artificial intelligence , structural engineering
Using a rich Norwegian panel dataset that includes information about the type and number of patent applications, direct environmental regulations, and a large number of control variables, we analyze the effects of direct regulations on environmental patenting. We use inspection violation status as a measure of regulatory stringency, while controlling for risk class. Violation status captures the probability that a firm might be sanctioned for violating its emission permit. Controlling for risk class captures firm heterogeneity related to dirtiness and inspection frequency. We empirically identify strong and significant effects on innovations resulting from the implicit regulatory costs of direct regulations.