The Determinants of Environmental Innovations and Patenting: Germany Reconsidered

This paper provides new evidence on the objectives and determinants of different types of innovations and patents, environmental as opposed to other innovations and patents, and different variants of environmental innovations and patents. We investigate how firm-specific and sector-specific driving forces differ by innovation type. Moreover, we outline the functions that different innovation types have for environmental and innovation policies. We find that eco-innovators put relatively more attention to cost reduction, in particular the reduction of energy and resource costs, compared to other innovators. Cost pressure and reliable, predictable and strict framework conditions of environmental policy turns out to be an important driver for more incremental, firm-level eco-innovations contributing to the diffusion of principally known technologies among firms. By contrast, more far-reaching patented eco-innovations are driven by the opportunity to create new markets and by government subsidies.