Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248967 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9422
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This article tests the effects of fuel economy and greenhouse gas emission standards on the direction of innovation, in particular on breakthrough technologies in the automotive industry. We develop an intuitive measure of standard stringency that captures the policy’s most important features for the decision as to whether or not to innovate. To test the role of these standards relative to prices and taxes, we construct a firm-level panel of patents in clean and dirty automotive technologies for the years 2000-2016. Our results indicate that standards are a very robust driver inducing clean innovation, whereas taxes also seem to play a role but prices (net of taxes) do not. This effect is driven by patenting for breakthrough technologies, in particular electric vehicle and hydrogen fuel cell technologies. We find no evidence that these policies negatively impact dirty innovation.
Subjects: 
environmental policy instruments
regulatory stringency
innovation
directed technical change
JEL: 
O30
Q55
Q58
Document Type: 
Working Paper
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