Triggering environmentally friendly technology development

This paper examine the magnitude of the effect of the Norwegian R&D tax credit program, known as SkatteFUNN, on firm patenting as well as on patent quality measured using patent citations. We are also interested in investigating whether the R&D tax credit is sufficient in order to reduce the externalities and create incentives for patenting of environmental technologies.

We investigate whether the R&D tax credit scheme – which is generic in the sense that it offers the same R&D support for any type of technology (clean, dirty or other) – thus has the same effect on environmental and non-environmental technology patenting. We will also investigate the effects of R&D support specifically targeted towards environmental technology development. Through this study we seek to contribute to the policy discussion on the effectiveness of the various R&D support alternatives. We have access to a detailed Norwegian firm level patent data set including both domestic and foreign patent citations where we identify the patenting firms through official organizational numbers, allowing a better match with other important firm level data. We are thus able to control for firm size, the education level of each firm's employees, capital intensity, economic performance, industry affiliation, and more.