Working Paper: NBER ID: w8593
Authors: David Popp
Abstract: Although economists cite potential gains from induced innovation as an advantage of using market-based mechanisms to protect the environment, counts of patents related to flue gas desulfurization units ('scrubbers') peaked before trading of sulfur dioxide (SO2) permits began. This paper uses plant level data to study the effect of these patents on pollution control. I find that requiring plants constructed before 1990 to install scrubbers created incentives for innovation that would lower the costs of operating scrubbers. There is little evidence that the new patents created before 1990 improved the ability of scrubbers to more effectively control pollution. However, patents granted during the 1990s, when market-based mechanisms were in place, do serve to improve the removal efficiency of scrubbers.
Keywords: No keywords provided
JEL Codes: O33; Q00; Q25; Q28; Q48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regulatory requirements (L51) | innovation incentives (O31) |
| pre-1990 patents (O34) | operating costs (D23) |
| pre-1990 patents (O34) | removal efficiency (Q52) |
| patents granted in the 1990s (O38) | removal efficiency (Q52) |