The Effects of Health and Environmental Regulation on Technological Change in the Chemical Industry: Theory and Evidence

Abstract

This paper presents the final results of a research effort which investigated the effects of environmental/safety regulation on technological change in the U.S. chemical industry. (1) The term environmental/safety regulation is used to include the legislation, regulations, and other related actions which attempt to control environmental pollution, protect worker health and safety, or ensure the safety of consumer products. Technological changes arising from regulation encompass both the immediate modifications in manufactured products or industrial processes which may be necessary in order to comply with regulation and the more indirect, or ancillary, effects regulation can have on technological change for non-regulatory, "main business" purposes. The major emphasis in this work is on technological change for compliance purposes.

We distinguish technological change from innovation. Innovation means new product or process technology actually brought by a firm into first commercial use. The term technological change has a broader scope and includes "non-innovative" changes.