Pollution Control Innovations and the Clean Air Act of 1990
|Publication:||Journal of Policy Analysis and Management, 22(4), pp. 641-660|
One advantage often cited for market-based environmental policies is that they are more likely to promote technological innovation than command and control regulations. This paper uses patent data to study innovation in flue gas desulfurization units (“scrubbers”) across these policy regimes. Using plant level data to study the effect of these patents on pollution control, I find the effect of these patents changed after passage of the 1990 Clean Air Act, which instituted a market for sulfur dioxide (SO2) permits. Previous regulations requiring plants constructed before 1990 to install scrubbers created incentives for innovation that lowered the costs of operating scrubbers, but did little to improve the environmental effectiveness of the technology. In comparison, innovations occurring since 1990 do serve to improve the removal efficiency of scrubbers.