Regulatory Distance and the Transfer of New Environmentally Sound Technologies: Evidence from the Automobile Sector

Abstract

SummaryThis article examines the impact of environmental regulation within countries as well as regulatory distance between countries on international technology transfer. We employ a recently-assembled dataset of automobile emission standards and corresponding data on non-resident patent filing of automotive environmentally sound technologies (ESTs) in 49 countries between 1992 and 2007. Our analysis shows that an important factor shaping transfers is relative regulatory distance in that countries are more likely to receive newlyinnovated technologies from source countries whose regulatory standards are "closer" to their own. Absolute stringency matters as well, consistent with conventional wisdom, although raising domestic environmental standards as such only leads to higher inflows of ESTs in developing countries. Novel to the literature, we show that regulatory standards in the third markets of a country's trading partners also influence transfers: countries receive more ESTs from a specific source country where they export more to markets whose regulatory standards are similar to those of the source country of the transferred technologies. As concerns both domestic regulation and regulation in a country's major export markets, it is therefore regulatory distance that matters most rather than absolute regulatory levels. This article examines the impact of environmental regulation within countries as well as regulatory distance between countries on international technology transfer. We employ a recently-assembled dataset of automobile emission standards and corresponding data on non-resident patent filing of automotive environmentally sound technologies (ESTs) in 49 countries between 1992 and 2007. Our analysis shows that an important factor shaping transfers is relative regulatory distance in that countries are more likely to receive newly-innovated technologies from source countries whose regulatory standards are "closer" to their own. Absolute stringency matters as well, consistent with conventional wisdom, although raising domestic environmental standards as such only leads to higher inflows of ESTs in developing countries. Novel to the literature, we show that regulatory standards in the third markets of a country's trading partners also influence transfers: countries receive more ESTs from a specific source country where they export more to markets whose regulatory standards are similar to those of the source country of the transferred technologies. As concerns both domestic regulation and regulation in a country's major export markets, it is therefore regulatory distance that matters most rather than absolute regulatory levels. Keywords

Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry

“…Data for environmental standards governing maximum permissible levels of tailpipe emissions for pollutants from new automobiles were sourced from a dataset originally constructed by Perkins and Neumayer (2012). Countries' regulatory stringency is coded on a scale of 0 to 5.…”

Green Technology Transfer, Environmental Regulation, and Regional Green Development Chasm: Based on the Empirical Evidence from Yangtze River Delta

“…Environmental regulation not only directly affects the green development chasm, but also affects the green development chasm by affecting green technology transfer. Strict environmental regulation will not only stimulate green technology innovation, but also increase the cross-regional flow of green technology [ 14 ], the rate of green technology diffusion in areas is usually higher with strict environmental regulations than the loose ones, and environmental regulations will create an inductive effect on the green technology transfer [ 68 ]. Green technology transfer and environmental regulation emphasize market forces and government behavior, respectively, will promote the efficient allocation of green technology resources, while environmental regulation and other supporting policies will make up for the failure of market regulation and facilitate the transfer of green technology to underdeveloped areas.…”

“…For this reason, the relationship between green technology transfer and the green development chasm calls for more detailed consideration. In order to compensate for market failure, academics have addressed that the positive role of environmental regulation in stimulating green technology innovation, increasing the flow of green technology across regions, and bridging the green development chasm [ 13 , 14 ]. Realistically, however, the role of environmental regulation on the green development chasm is complex [ 13 ].…”

Investigating the impacts of technological position and European environmental regulation on green automotive patent activity

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