Knowledge Spillovers from Clean and Dirty Technologies: A Patent Citation Analysis

Government policy in support of innovation often varies across technology areas. An important example are climate change policies that typically try to support so called clean technologies that avoid greenhouse gas pollution and hamper dirty technologies that are associated with polluting emissions. At the margin private returns of R&D investments in different areas should be equalised. Hence, shifting the composition of R&D activities by a policy intervention will only have a meaningful impact on economic outcomes if the external returns differ. This paper compares innovation spillovers between clean, dirty and other emerging technologies using patent citation data. We develop a new methodology to capture knowledge spillovers using the Google’s Page rank algorithm. Exploring a wide range of robustness checks we consistently find up to 60% higher levels of spillovers from clean technologies. We also use firm-level financial data to investigate the impact of knowledge spillovers on firms’ market value and find that marginal economic value of spillovers from clean technologies is also greater.