Does the ‘California effect’ operate across borders? Trading- and investing-up in automobile emission standards

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

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“…All models include a full set of year dummies (not reported for brevity). Source: Authors, based on data in Perkins and Neumayer (2012) …”

Section: Resultsmentioning

confidence: 99%

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

2012

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“…As countries are permitted under World Trade Organisation rules to ban non-compliant imports, exporting countries have an incentive to re-engineer their products to meet the standards of importing countries. Companies may lobby their own governments to adopt domestic vehicle emissions standards similar to their highly regulated export markets to allow them to benefit from economies of scale by producing a single product for domestic and export markets and to gain a commercial advantage over competitors on the domestic markets lacking the compliance capacity (Perkins and Neumaye, 2012). An example is the process by which Germany successfully exerted pressure on the European Commission (EC) during the 1980s to adopt more stringent vehicle emission standards.…”

Section: Internationalisationmentioning

confidence: 99%

“…The German vehicle manufacturers were major exporters to the higher regulated US market and already producing vehicles compliant with the more stringent emission standards. Raising emissions standards throughout the EU gave German companies a competitive advantage at least in the short term over some of their competitors (Perkins and Neumaye, 2012).…”

Section: Internationalisationmentioning

confidence: 99%

The changing winds of atmospheric environment policy

Murray¹

2013

Environmental Science & Policy

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“…6 The lagged dependent variable will be included in some specifications in Appendix D to control for inertia in fiscal instruments. 7 The data for automobile emission regulations was taken from Perkins & Neumayer (2012) 8 A two-step estimator is applied using the level equation and the first difference regression equation, where the first order difference variables and the lagged variables are employed as instrument variables for the level and first difference equation, respectively (Blundell & Bond, 1998) The dynamic GMM could also make it possible to correct possible endogeneity of our variables of interest.…”

Section: Econometric Specificationmentioning

confidence: 99%

Are Environmental Taxes Affected by Legislatures` Ideological Positions?

Miller

Vela

2013

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent. Terms of use: Documents inThe unauthorized commercial use of Bank documents is prohibited and may be punishable under the Bank's policies and/or applicable laws. Copyright ©Inter-American Development Bank. This working paper may be reproduced for any non-commercial purpose. It may also be reproduced in any academic journal indexed by the American Economic Association's EconLit, with previous consent by the Inter-American Development Bank (IDB), provided that the IDB is credited and that the author(s) receive no income from the publication. Cataloging-in-Publication 2013 AbstractEnvironmental taxes have been discussed as one of the main mechanisms to deal with environmental problems. Nonetheless, instruments of this type have rarely been implemented, and the adoption of new or higher environmental taxes has faced resistance in some countries. The purpose of this work is to identify one possible political answer to why adoption of environmental taxes varies. One explanation is that legislatures' ideological position affects the degree of usage of taxes generally and environmental taxes in particular. For example, right-wing parties tend to be less associated with environmental concerns and more associated with lower government intervention. This paper presents evidence that reflects this relationship, showing the positive association of more left-wing legislatures with higher levels of environmental taxation. A panel of data for 37 developed and developing countries over 16 years is used considering the percentage of total revenue from environmentally related taxes, the ratio of this revenue to total energy use and tax levels in industry and household sectors. The results show that most of these impacts involve environmentally related taxes in the industry sector. Proportional representation electoral systems and high seat concentration by few parties appear to be necessary conditions for the negative relation of right-wing ideology with environmental taxes.JEL classification: H23, P16, Q58.

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Does the ‘California effect’ operate across borders? Trading- and investing-up in automobile emission standards

Cited by 85 publications

References 53 publications

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

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

The changing winds of atmospheric environment policy

Are Environmental Taxes Affected by Legislatures` Ideological Positions?

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