| Abstract |
This research traces the development of nitrogen dioxide (NOX) and sulfur dioxide (SO2) pollution control devices for coal-fired power plants in the United States, Japan, and Germany. This is of particular interest because of the timing of regulation in each country. While the US was an early adopter of SO2 regulations, it did not adopt stringent NOX regulations until the 1990s. Both Japan and Germany adopted stringent NOX regulations earlier. As such, advanced control techniques such as selective catalytic reduction (SCR) were first developed in Japan and Germany. In contrast, US firms were more active in the development of SO2 control devices. This study uses patent data from the three countries, as well as adoption data for individual plants, to trace the development of these technologies. Of particular interest is the role of technology transfer. While we know from previous research that firms respond to new regulations in their own country with new innovations, we do no t know the extent to which firms respond to regulations in foreign countries. Moreover, we know little about how innovations developed abroad enter the domestic knowledge base. For example, do firms make direct use of knowledge developed in foreign countries, or is domestic R&D necessary to adapt these innovations to local conditions. Understanding such trends is important, as it affects both the speed at which technology will diffuse, and the cost of technology transfer. To address these issues, this research compares the role that domestic and foreign knowledge play in the decisions of firms to adopt new environmental technologies. I begin by using patent and regulatory data from the U.S., Japan, and Germany to study the links between both domestic and foreign environmental policy and innovation. I show that innovative activity responds to domestic environmental policy pressures, but not to foreign pressures. Moreover, even countries that adopt regulations late, such as the U.S. in the case of NOX, increase innovative activity in response to new domestic regulations. |
