Environmental Policies and Directed Technological Change

Publication: Working/Discussion PaperWU Working Paper

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This article evaluates if and to which extent policy can steer innovation towards eco-friendly technologies. We construct a cross-country dataset on sectoral green innovation and complement it with data on policies designed to address environmental market failures: environmental taxes, regulation, and R&D subsidies. While all of these tools exert a positive effect on green innovation, our IV estimates reveal substantial heterogeneities across policies. Overall, green innovation reacts most strongly to R&D subsidies for renewables, but interaction effects between different policies need to be considered.
Original languageEnglish
PublisherWU Vienna University of Economics and Business
Publication statusPublished - Dec 2023

Publication series

SeriesDepartment of Economics Working Paper Series

WU Working Paper Series

  • Department of Economics Working Paper Series


  • climate change
  • environmental policies
  • directed technological change
  • green patents
  • regulation
  • taxes
  • R&D

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