By Henning Diederich

This thesis investigates the relationship among environmental rules, technological innovation, and export competitiveness in renewable power gear in response to a wide pattern of 225 constructed and constructing international locations from 1990 to 2012. The empirical research yields robust helping facts for the narrowly robust Porter speculation in addition to for the lead marketplace idea. the implications recommend that environmental rules drives innovation and export volumes in sun- and wind-power-related items. this can be really the case for well-crafted (i.e. market-based, output-oriented, and transparent) tools equivalent to carbon buying and selling regimes. in addition, the information express that early adopters of renewable strength aid rules profit most.

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In other words, only domestic regulation changes are found to induce environment-related innovation in electricity generation technologies. Similarly, Calel & Dechezleprêtre (2012) show in their economy-wide study on the impact of the European Emission Trading Systems (EU ETS) on patent applications by European firms in the years 2000 to 2009 that regulated firms reacted to the EU ETS introduction by a 10% increase in low-carbon innovations. Unregulated firms, which were not affected by the EU ETS introduction, did not change their innovation patterns.

2 Empirical research on the Porter Hypothesis This section presents the empirical literature on the weak, narrow, strong and narrowly strong Porter Hypothesis and discusses its main results, common shortcomings and limitations, and highlights areas of future research. The discussion builds on but is not limited to the literature reviews of Ambec, Cohen, Elgie, & Lanoie (2011, 2013), Ambec & Barla (2006), 15 Ambec & Lanoie (2008), and Brännlund & Lundgren (2009) . In addition to the literature presented in these reviews, I introduce the most recent studies and working papers to ensure a comprehensive and up-to-date picture on research on the Porter Hypothesis.

The discussion starts with publications that proxy innovation by plant age. Nelson, Tietenberg, & Donihue (1993) are first to examine this relationship. Using a simultaneous equation model with three equations for regulatory stringency, emission levels and plant age, they find that average plant age of US steam power plants increased by more than three years between 1969 and 1983. A more recent study by Hamamoto (2006) finds for a sample of Japanese manufacturing firms in the 1960s and 1970s that regulation had a negative impact on plant age.

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