Job Market Paper
Pollution Prevention or Green Innovation? Unraveling Firms' Environmental Choices
Abstract: I compare two key corporate environmental actions: (i) source reduction, which refers to process and operational changes to prevent pollution at its origin, and (ii) green patents, which capture environmental innovations protected by intellectual property rights. Linking data from S&P Compustat, the EPA TRI, and supplemental sources from 2001–2020, I find that firms that patent tend to have larger asset bases, are more capital-intensive, hold greater cash reserves, and operate in less-concentrated industries than firms that take no action, while firms focusing on source reduction are more emission-intensive and subject to closer regulatory scrutiny. I also find significant substitution between these actions at the firm level. I then examine the motivations for this substitution and whether the two actions deliver distinct returns. Both reduce emissions, but their broader payoffs diverge: green patents bring regulatory relief and grant firms a competitive edge reflected in higher markups. Quantitatively, within firms, an additional green patent reduces source reduction activity by about 1%, cuts emissions by 3.7%, and raises markups modestly. At the industry level, 10 additional patents filed in the prior two years lowers the probability of a new enforcement case by about 3 percentage points. Source reduction, by contrast, yields gains only on the environmental side: an additional source reduction activity lowers emissions by about 1.7% of the mean.
Working Paper
Does Pollution Prevention Enhance Firm Efficiency? Insights from U.S. Manufacturing (with Subal Kumbhakar and Yingjun Su) (Under Review) SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5216530
Presentations: North American Productivity Workshop, Jun 2025.* Ulvön Conference on Environmental Economics, June 2025.
*represents presentation by co-author.
Work in Progress
Role of Preventive and Control Investments in Pollution Management: A Case of Swedish Manufacturing Firms (with Shuyi Wang & Subal Kumbhakar)
Product Market Turnovers in India: Distortions, Creative Destruction, or Consumer Appeal? (with Wenya Wang & Subal Kumbhakar)