Working Paper: NBER ID: w13439
Authors: David Popp; Tamara Hafner; Nick Johnstone
Abstract: In the late 1980s and early 1990s, concern over dioxin in both paper products and wastewater led to the development of techniques that reduced the use of chlorine in the pulp industry. Both regulatory and consumer pressure motivated this change. We use patent data to examine the evolution of two completing bleaching technologies in five major paper-producing countries, both of which reduce the use of chlorine in the pulping process. By the end of the 1990s, nearly all pulp production in these countries used one of these technologies. Unlike other papers using patents to study environmentally-friendly innovation, we focus on a process innovation, rather than on end-of-the-pipe solutions to pollution. Moreover, while previous studies emphasize the importance of regulation for inducing innovation, here we find substantial innovation occurring before regulations were in place. Instead, pressure from consumers to reduce the chlorine content of paper drives the first round of innovation. However, while some companies choose to adopt these technologies in response to consumer pressure, not all firms will differentiate their product in this way. Thus, governments need to regulate if their goal is broad diffusion of the environmental technology.
Keywords: innovation; environmental policy; pulp industry; bleaching technologies
JEL Codes: O31; O33; Q53; Q55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Consumer pressure (D12) | Innovation in chlorine-free technologies (Q55) |
| Regulation (L51) | Adoption of ECF and TCF technologies (O33) |
| Consumer pressure (D12) | Adoption of ECF and TCF technologies (O33) |