Industrial R & D and Regulatory Standards: The Case of Toxic Air Emissions in Manufacturing
Dartmouth College Working Paper 94-22
Posted: 19 May 1998
Date Written: Undated
The paper presents a model in which government standards regarding toxic air emissions increase R & D for process innovations that reduce pollution. To estimate the model, primary data about manufacturers' process R & D aiming to reduce the toxic air emissions of chemicals targeted in Title III of the Clean Air Act amendments of 1990 are developed from the responses to a questionnaire mailed to the companies in the Business Week R & D Scoreboard sample for 1993. Complementary data for company and industry characteristics are developed from publicly available government and private sources. Estimation supports the theoretical role for standards. Thus, a role for government, when society wants to reduce the negative externalities caused by hazardous air emissions in production, is to set standards that cause firms to accept the uncertainty of R & D investment in reducing toxic emissions. The model also takes a fresh look at the R & D effects of company and industry characteristics, including the effects of spillovers of knowledge.
JEL Classification: O31, O32, O38, L13, L51, K32
Suggested Citation: Suggested Citation