Do voluntary pollution reduction programs (VPRs) spur or deter environmental innovation? Evidence from 33/50

We study whether a government-sponsored voluntary pollution reduction program (VPR) promotes or deters the development of new environmental technologies that yield future emission reduction benefits. Using a panel of 127 U.S. manufacturing industries defined by 3-digit SIC classifications over the 1989-2004 period, we estimate impacts of industry-level participation in the 33/50 program, a VPR initiated by government regulators in 1991, on industry-level rates of environmental patenting. We find that higher rates of 33/50 program participation are associated with significant reductions in the number of successful environmental patent applications five to nine years after the program ended.