Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme
To cope with radical global environmental regulation, it is necessary to find efficient ways to decrease carbon emissions with a low burden on firms and to design valid policies for a sustainable economy. This study investigates the link between the carbon emissions market and firms’ innovation acti...
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| Format: | Article |
| Language: | English |
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MDPI AG
2024-12-01
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| Series: | Energies |
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| Online Access: | https://www.mdpi.com/1996-1073/17/23/6049 |
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| author | Jung Youn Mo Wooyoung Jeon |
| author_facet | Jung Youn Mo Wooyoung Jeon |
| author_sort | Jung Youn Mo |
| collection | DOAJ |
| description | To cope with radical global environmental regulation, it is necessary to find efficient ways to decrease carbon emissions with a low burden on firms and to design valid policies for a sustainable economy. This study investigates the link between the carbon emissions market and firms’ innovation activities and examines the impact of R&D investment caused by the carbon emissions market on the financial performance of firms participating in the Korean Emission Trading Scheme (KETS). This study assumes that a well-designed carbon emissions market can amplify the effect of R&D investment on improving the financial performance of firms and tests the efficiency of this market based on the KETS data. The results show that the indirect R&D elasticity that affects financial performance is simultaneously negative in the short and long run, except in Phase 1 (2015–2018). From this result, this study concludes that the carbon emissions market cannot induce technological innovation to increase financial performance in Korea, and the dynamic efficiency of the market is low. The industry comparison results confirm that the emissions market has a statistically significant effect on financial performance only in carbon-intensive industries. This study thus shows that the impact of technological innovation induced by the carbon emissions market varies depending on industrial characteristics. |
| format | Article |
| id | doaj-art-e4cd75226aa943499ef50d8da567d44c |
| institution | Kabale University |
| issn | 1996-1073 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj-art-e4cd75226aa943499ef50d8da567d44c2024-12-13T16:25:53ZengMDPI AGEnergies1996-10732024-12-011723604910.3390/en17236049Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading SchemeJung Youn Mo0Wooyoung Jeon1Department of Economics, Chosun University, Gwangju 61452, Republic of KoreaDepartment of Economics, Chonnam National University, Gwangju 61186, Republic of KoreaTo cope with radical global environmental regulation, it is necessary to find efficient ways to decrease carbon emissions with a low burden on firms and to design valid policies for a sustainable economy. This study investigates the link between the carbon emissions market and firms’ innovation activities and examines the impact of R&D investment caused by the carbon emissions market on the financial performance of firms participating in the Korean Emission Trading Scheme (KETS). This study assumes that a well-designed carbon emissions market can amplify the effect of R&D investment on improving the financial performance of firms and tests the efficiency of this market based on the KETS data. The results show that the indirect R&D elasticity that affects financial performance is simultaneously negative in the short and long run, except in Phase 1 (2015–2018). From this result, this study concludes that the carbon emissions market cannot induce technological innovation to increase financial performance in Korea, and the dynamic efficiency of the market is low. The industry comparison results confirm that the emissions market has a statistically significant effect on financial performance only in carbon-intensive industries. This study thus shows that the impact of technological innovation induced by the carbon emissions market varies depending on industrial characteristics.https://www.mdpi.com/1996-1073/17/23/6049financial performancecarbon emissionsinnovationdynamic panel GMMmanufacturing industry |
| spellingShingle | Jung Youn Mo Wooyoung Jeon Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme Energies financial performance carbon emissions innovation dynamic panel GMM manufacturing industry |
| title | Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme |
| title_full | Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme |
| title_fullStr | Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme |
| title_full_unstemmed | Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme |
| title_short | Dynamic Relationship Between Environmental Policy and Technological Innovation: Evidence from Firms in Korean Emission Trading Scheme |
| title_sort | dynamic relationship between environmental policy and technological innovation evidence from firms in korean emission trading scheme |
| topic | financial performance carbon emissions innovation dynamic panel GMM manufacturing industry |
| url | https://www.mdpi.com/1996-1073/17/23/6049 |
| work_keys_str_mv | AT jungyounmo dynamicrelationshipbetweenenvironmentalpolicyandtechnologicalinnovationevidencefromfirmsinkoreanemissiontradingscheme AT wooyoungjeon dynamicrelationshipbetweenenvironmentalpolicyandtechnologicalinnovationevidencefromfirmsinkoreanemissiontradingscheme |