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Environmental protection, innovation and price-setting behavior in Spanish manufacturing firms

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  • de Miguel, Carlos
  • Pazó, Consuelo

Abstract

In this paper, we analyze the effects of environmental protection regulation on process and product innovation decisions and their impact on price-setting behavior in Spanish manufacturing firms throughout 2009–2014. To this end, we estimate several discrete choice probit models using firm-level data. Our results show a positive relationship between the existence of environmental regulations (environmental expenditures as a proxy) and innovation. However, the magnitude of the effects and their significance depend on the type of innovation and the size of the firms: environmental regulation positively impacts process innovation only in large firms (>200 workers) while it positively impacts product innovation exclusively in small firms (up to 200 workers). Taking into account innovation activities, we additionally explore the behavior of product prices. We obtain that process innovation increases the probability of reducing prices for both small and large firms; while product innovation only raises the likelihood of increasing prices for the former. Finally, we look into the determinants of investment in environmental protection and find a positive impact of environmental regulation.

Suggested Citation

  • de Miguel, Carlos & Pazó, Consuelo, 2017. "Environmental protection, innovation and price-setting behavior in Spanish manufacturing firms," Energy Economics, Elsevier, vol. 68(S1), pages 116-124.
    • Handle: RePEc:eee:eneeco:v:68:y:2017:i:s1:p:116-124
    DOI: 10.1016/j.eneco.2017.10.030
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    3. Yongfeng Zhu & Zilong Wang & Shilei Qiu & Lingling Zhu, 2019. "Effects of Environmental Regulations on Technological Innovation Efficiency in China’s Industrial Enterprises: A Spatial Analysis," Sustainability, MDPI, vol. 11(7), pages 1-19, April.
    4. Zhu, Xuehong & Zuo, Xuguang & Li, Hailing, 2021. "The dual effects of heterogeneous environmental regulation on the technological innovation of Chinese steel enterprises—Based on a high-dimensional fixed effects model," Ecological Economics, Elsevier, vol. 188(C).
    5. Chang Li & Mingyang Li & Lu Zhang & Tingyi Li & Hanzhen Ouyang & Sanggyun Na, 2019. "Has the High-Tech Industry along the Belt and Road in China Achieved Green Growth with Technological Innovation Efficiency and Environmental Sustainability?," IJERPH, MDPI, vol. 16(17), pages 1-18, August.
    6. Zhang, Jian & Zhang, Wei & Song, Qi & Li, Xin & Ye, Xuanting & Liu, Yu & Xue, Yawei, 2020. "Can energy saving policies drive firm innovation behaviors? - Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 154(C).
    7. Abdulla, Eman & Lim, King Yoong & Morris, Diego & Saliba, Faten, 2022. "Climate Change, Gender Equality, and Firm-Level Innovation : Cross-Country Evidence," The Warwick Economics Research Paper Series (TWERPS) 1429, University of Warwick, Department of Economics.
    8. Zeng, Juying & Blanco-González-Tejero, Cristina & Sendra, F. Javier, 2023. "The spatial difference-in-difference measurement of policy effect of environmental protection interview on green innovation," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    9. Manli Cheng & Zhen Shao & Changhui Yang & Xiaoan Tang, 2019. "Analysis of Coordinated Development of Energy and Environment in China’s Manufacturing Industry under Environmental Regulation: A Comparative Study of Sub-Industries," Sustainability, MDPI, vol. 11(22), pages 1-20, November.
    10. Xia, Dan & Wang, Xiang-Qian, 2021. "The synergetic impact of environmental and innovation information disclosure on corporate financial performance: An empirical study based on China coal listed companies," Technovation, Elsevier, vol. 100(C).

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    More about this item

    Keywords

    Environmental expenditure; Environmental investment; Innovation; Price-setting; Porter hypothesis;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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