Journal
INDUSTRY AND INNOVATION
Volume 22, Issue 5, Pages 375-401Publisher
ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
DOI: 10.1080/13662716.2015.1064255
Keywords
Environmental policy; regulation; R&D; technological change; innovation; crowding out; O32; O33; Q55
Categories
Funding
- government of Baden-Wurttemberg
- Flemish Science Foundation (FWO)
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Substantial policy effort is devoted to stimulate environmentally friendly technology through regulation and subsidies. Since innovation is a crucial productivity driver, a potential crowding out of inventive efforts in affected firms may increase the cost of regulation. We study the effects of regulation-induced environmental technology on innovation activities for a sample of firms in Germany. We find some evidence for a crowding out of firms' in-house R&D, especially for firms facing financing constraints. Innovation outcomes and investments in innovation-related fixed assets are not affected. Moreover, subsidy-backed environmental technology does not crowd out R&D.
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