The Impact of Voluntary Environmental Policy on Technological Innovation: the Case of Household Appliance Firms
*Names in bold indicate Presenter
The objective of this paper is to examine the impact that voluntary environmental policy has on innovation in household appliance firms. The key hypothesis is that firms participating in the ENERGY STAR program were more likely to innovate in response to the 1997 ENERGY STAR criteria update than firms that did not participate. To test this hypothesis, I collected patent data from 1985 to 2004 to analyze firms’ innovation behaviors related to the energy efficiency of refrigerators; I gathered the data from the United States Patent and Trademark Office database. Using a difference-in-differences estimation method, I found weak evidence of the impact of ENERGY STAR on participating firms’ patents. However, I found no evidence that the impact on innovation differed for foreign and domestic firms. I also found no evidence of a mandatory environmental policy on innovation, which suggests that voluntary policies may be crowding out mandatory ones.