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Air pollution and innovation

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  • Bracht, Felix
  • Verhoeven, Dennis

Abstract

If air pollution harms innovation — and therefore future productivity — existing assessments of its economic cost are incomplete. We estimate the effect of fine particulate matter concentration on inventive output in 977 European regions. Exploiting thermal inversions and weather-induced ventilation of pollutants for identification, we find that a decrease in air pollution equivalent to the average yearly drop in Europe leads to 1.2% more patented inventions in a given region. A back-of-the-envelope calculation suggests that accounting for the effect on innovation increases the economic cost of air pollution as assessed in prior work by about three quarters.

Suggested Citation

  • Bracht, Felix & Verhoeven, Dennis, 2025. "Air pollution and innovation," LSE Research Online Documents on Economics 126875, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:126875
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    File URL: http://eprints.lse.ac.uk/126875/
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    More about this item

    Keywords

    air pollution; air quality; innovation; productivity;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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