Green R&D, Technology Spillovers, and Market Uncertainty: An Empirical Investigation

What drives firms’ investments in green R&D? We use Organisation for Economic Cooperation and Development facility-level data to address three main questions, namely, (1) the relationship between R&D and green R&D at the firm level, (2) whether investments in R&D at the industry level can be perceived as complementary to firm-specific investments in green R&D, and (3) whether market uncertainty and capital obsolescence affect microdecisions concerning the introduction of green technology. We find that facility-level R&D intensity and industry-level R&D intensity reinforce one another in enhancing green R&D investments at the facility level, thereby suggesting the presence of positive R&D spillovers. (JEL D21, O14)