SPRINGER BRIEFS IN ECONOMICS Ashish Bharadwaj Environmental Regulations and Innovation in Advanced Automobile Technologies Perspectives from Germany, India, China and Brazil 123 SpringerBriefs in Economics More information about this series at http://www.com/series/8876 Ashish Bharadwaj Environmental Regulations and Innovation in Advanced Automobile Technologies Perspectives from Germany, India, China and Brazil 123 Ashish Bharadwaj Jindal Global Law School O. Jindal Global University Sonipat, Haryana India ISSN 2191-5504 ISSN 2191-5512 (electronic) SpringerBriefs in Economics ISBN 978-981-10-6951-2 ISBN 978-981-10-6952-9 (eBook) https://doi.1007/978-981-10-6952-9 Library of Congress Control Number: 2017955260 © The Author(s) 2018 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc.
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Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Technology certainly owes an apology to ecology: But, with synergy, it offers an opportunity to fortify recovery. To my mother, the strongest person I know, for her generosity Acknowledgements I acknowledge with gratitude the financial support I received for my research from the Max Planck Gesellschaft and the Max Planck Institute for Innovation and Competition in Munich (Germany) during 2009 and 2012; and the Institute for Innovation Research, Technology Management and Entrepreneurship (INNO-tec) at Ludwig-Maximilians-Universität München (LMU), Munich, Germany, during 2012 and 2014. I am particularly grateful to Professor Dietmar Harhoff, an academic giant in the field of innovation economics, for providing me with the protected academic time and continuous support.
This would probably not have been possible without friends who were an integral part of my social support system. I have countless memories of spending wonderful time with Thimo, Ana, Jason Alka, and Augustiner. Mrinalini brought in the much needed positive vibe in our office room, and I am grateful to her for introducing the idea of balance at work and in personal life. I remember numerous discussions I have had with Owais, a colleague then and a dear friend now, on various topics, related to our respective work and, sometimes, completely unrelated to anything meaningful.
My good friend Rahul was one of the reasons I always looked forward to going back home to unwind from work. I am forever indebted to my mother, Vinay, who has always put my interests ahead of hers. I am always thankful to my family - Manasi, Pushpam, Gargi, and Siddharth - for being a constant source of inspiration, for their uncompromising words of wisdom and untiring words of caution. I am grateful to my partner, Richa, for her help in understanding why writing this acknowledgment is important.
As with so many things, I did not appreciate them then as much as I admire them now. Liankhankhup Guite, Joy Saini and Punkhuri Chawla helped with valuable research assistance in preparation of this manuscript. I am thankful to Nupoor Singh at Springer for her time and patience. ix Contents 1 Evolution of the Global Automobile Industry .1 From Steam and Electricity to Petrol and Diesel .2 The Big Three .3 Rise of Non-U.4 Tightening Environmental Regulations .5 The Rise of Brazil, India, and China.
9 2 Changing Dynamics of the Industry .1 The Automotive Industry and Economic Growth .2 Innovation in the Automotive Industry .3 New Technology and Related Issues .5 Environmental Regulation and Innovation .1 Theoretical and Empirical Evidence .6 Overview of Green Automotive Technology. 21 3 Environment, Health, and New Technologies .1 Environment and Health Concerns .2 Environmental Regulations and Growth .3 Environmental Regulation and Innovation .4 Environmental Regulation, Competitiveness, and Firm Performances. 29 4 Role of State and Regulatory Instruments .1 Environmental Regulation—Design and Instruments .2 Environmental Regulations in the Automotive Industry. 35 xi xii Contents 4.
48 5 Where Do Brazil, India, and China Stand? .3 International Patent Classification for Green Automotive Technologies .4 Matching Regulations with IPCs .5 Findings: Regulatory Stringency Index. 68 6 Insights from the World of Patents .1 Patenting Trends Across Technologies and Markets .2 Measures of Innovation .3 Data and Sources .4 Understanding the Dataset .1 Variables and Definitions .3 Application Fillings and Grants. 79 7 Empirical Methodology and Findings .2 Regulatory Stringency: Unweighted Patent Count .1 Principal Hypotheses and Model Specification .3 Regulatory Stringency: Weighted Patent Count .3 Alternate Model Specification .4 Standard Difference-In-Difference Analysis .1 Model Specification. 99 Contents xiii 8 Conclusion .2 Public Policy Implications .3 Caveats and Future Research.
106 About the Author Dr. Ashish Bharadwaj is Assistant Professor at the Jindal Global Law School (JGLS), O. Jindal Global University, and Co-Director of Jindal Initiative on Research in IP and Competition (JIRICO)—a think tank focused on frontline research on issues at the interface of high-technology innovation, patents, and competition. He is Assistant Director of the Centre for Intellectual Property and Technology Law and the founding Editor of the Law & Policy Brief.
He writes extensively on the role of technology and innovation in shaping societies, licensing of standard essential patents, national IPR and innovation policies. He is an affili- ated faculty at the Center for Intellectual Property Research, Maurer School of Law, Indiana University, Bloomington, USA, and a Visiting Associate Professor at the Institute for Innovation Research, Hitotsubashi University, Tokyo. He holds a Ph. from the Max Planck Institute for Innovation and Competition, Munich; European Master in Law and Economics from Erasmus University Rotterdam, the Netherlands, University of Hamburg, Germany, and University of Manchester, UK; Master in Economic Sciences from Madras School of Economics, Anna University; and a B.
Honors in Economics from Delhi University. xv Abbreviations ACEA Association des Constructeurs Européens d'Automobiles (European Automobile Manufacturers Association) ANFAVEA Associação Nacional dos. Fabricantes de Veículos Automotores (National Association of Automobile Manufacturers, Brazil) ARAI Automotive Research Association of India BIC Brazil, India and China BRICS Brazil, Russia, India, China and South Africa BS-I Bharat Stage Emission Norms-I CAFE Corporate Average Fuel Economy CCV Closed Crankcase Ventilation CGPDTM Controller General of Patents Designs and Trademarks (India) CNG Compressed Natural Gas CO Carbon monoxide CONAMA Conselho Nacional do Meio Ambiente (National Council for the Environment, Brazil) CPCB Central Pollution Control Board, India CRDI Common Rail Diesel Injection DOC Diesel oxidation catalyst DPF Diesel particulate filter EEC/EC European Economic Community/European Community EEV Enhanced Environmentally Friendly Vehicle EGR Exhaust gas recirculation EPB Environment Pollution Bureau, People’s Republic of China EPO European Patent Office GDI Gasoline direct injection GVW Gross vehicle weight HC Hydrocarbons IBAMA Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis (Brazilian Institute of Environment and Renewable Natural Resources) xvii xviii Abbreviations ICCT International Council on Clean Transportation ICE Internal combustion engine IEA International Energy Agency INPI Instituto Nacional da Propriedade Industrial (National Institute of Industrial Property, Brazil) IPC International Patent Classification LDVs Light duty vehicles LNC/LNT Lean NOx catalyst/trap LPG Liquefied petroleum gas MEP Ministry of Environmental Protection, People’s Republic of China MHCVs Medium and heavy commercial vehicles MoEF Ministry of Environment and Forests, India MPFI Multipoint fuel injection NAAQS National Ambient Air Quality Standards (USA) NMHC Non-methane hydrocarbons NOx Nitrogen oxide OBD Onboard diagnostics OECD Organization for Economic Cooperation and Development OICA Organisation Internationale des Constructeurs d’Automobiles (International Organization of Motor Vehicle Manufacturers) PM Particulate Matter PROCONVE Programa de Controle da Poluição do Ar por Veículos Automotores (Motor Vehicle Emission Control Program, Brazil) RSI Regulatory Stringency Index SCR Selective Catalytic Reduction SEPA State Environmental Protection Administration, People’s Republic of China SIAM Society of Indian Automobile Manufacturers SIPO State Intellectual Property Office, People’s Republic of China SO2 Sulfur dioxide THC Total hydrocarbons UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change USEPA United States Environment Protection Agency VOC Volatile organic compounds List of Figures Fig.1 Impact of environmental regulation: PPF analysis.1 Emission levels in selected cities: developing versus developed cities .1 Regulatory Stringency Index of Germany .2 Regulatory Stringency Index of India .3 Regulatory Stringency Index of China .4 Regulatory Stringency Index of Brazil .2 Change in top 5 applicants in Germany over time .3 Change in top 5 applicants in India (1990–2010) .4 Change in top 5 applicants in Brazil (1990–2010) .5 Change in top 5 applicants in China (1990–2010). 79 xix List of Tables Table 4.1 Policy instruments to curb environmental impact of vehicles .2 EU emission norms for gasoline-run passenger cars.3 EU emission norms for diesel-run passenger cars .4 India emission norms for petrol-run vehicles .5 India emission norms for diesel-run vehicles .6 Indian National Ambient Air Quality Standards 2009 .7 Comparison of Corporate Average Fuel Economy Standards (2010 & 2020) .8 Chinese emission norms for gasoline (positive ignition) vehicles .9 Emission norms for diesel (compression ignition) vehicles .10 Overview of trends by emissions standards in 2009.11 Brazilian emission norms .1 International Patent Classification (IPC): Technology Area B01D .2 International Patent Classification (IPC): Technology Area B01J .3 International Patent Classification (IPC): Technology Area F01M .4 International Patent Classification (IPC): Technology Area F02M .5 International Patent Classification (IPC): Technology Area F01N .6 International Patent Classification (IPC): Technology Area F02D .7 List of relevant amendments to European Directive 70/220/EEC .8 Cumulative Regulatory Stringency Index (RSI): Germany .9 Cumulative Regulatory Stringency Index (RSI): India.
63 xxi xxii List of Tables Table 5.10 Cumulative Regulatory Stringency Index (RSI): China .11 Cumulative Regulatory Stringency Index (RSI): Brazil .1 Disaggregated impact of regulatory stringency: OLS estimates 1 .2 Disaggregated impact of regulatory stringency: OLS estimates 2 .3 Descriptive statistics: full sample .4 Aggregate impact of regulatory stringency .5 Estimates Based on a Negative Binomial Model .6 Descriptive statistics: sub-sample .8 Panel Data Estimates: sub-sample .9 Negative Binomial Model: sub-sample panel data .10 Difference-in-difference estimation: year 2000 .11 Difference-in-difference estimation: year 2005. 97 Chapter 1 Evolution of the Global Automobile Industry Abstract The global automotive industry has undergone significant changes since the invention of the automobile. The industry has transformed from being domi- nated by the USA in the early 1900s to being divided between a variety of different countries, each with their own unique strengths and weaknesses. The underlying technology has also experienced radical technological innovations, with the increasing popularity of diesel, hybrid and fully electric vehicles helping to diversify the market.
Changes in the regulatory environment and internal produc- tion processes have also molded the industry, making more efficient cars accessible to the mass public. In years to come, automotive companies in Brazil, India and China (part of the BRIC group) are likely to continue to grow their share of the global market, while concomitant rise in environmental concerns are likely to bring substantial changes in how the industry adapts and evolves in the future. This study has three broad objectives. First, to trace how regulations pertaining to vehicular pollution have changed and what factors caused them to become more stringent over time.
Second, how patenting of promising environment-friendly inventions, as a result of continuous technological innovation, promises to ameliorate some environmental concens.