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Does air quality affect inventor productivity? Evidence from the NOx budget program

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  • Luo, Yue
  • Chen, Yangyang
  • Lin, Ji-Chai

Abstract

Using the NOx budget program (NBP) as a quasi-natural experiment, we study how air quality affects the productivity of patent inventors. Motivated by previous studies linking air quality to people's risk-taking tendencies and cognitive abilities, we find that after the implementation of the NBP, inventors located in NBP participating states produce more patents and the quality of their patents increases. These inventors engage more in exploratory innovation and less in exploitative innovation, and they shift their strategies toward risky, high-value innovation. Our findings suggest that risk-taking and cognitive ability are the channels through which improved air quality enhances inventor productivity.

Suggested Citation

  • Luo, Yue & Chen, Yangyang & Lin, Ji-Chai, 2022. "Does air quality affect inventor productivity? Evidence from the NOx budget program," Journal of Corporate Finance, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:corfin:v:73:y:2022:i:c:s092911992200013x
    DOI: 10.1016/j.jcorpfin.2022.102170
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    More about this item

    Keywords

    Air quality; Inventor productivity; Innovation strategy; Innovation quality;
    All these keywords.

    JEL classification:

    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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