The aim of this study is to examine the effects of a market-based greenhouse gases price on green innovation by testing the Hicksian theory of induced innovation. To test whether causality exists, panel data compiled of 30 countries over 13 years (2005-2017) have been used. The study is restricted to the European Union emission trading scheme, where the price of EUA has been used as a market-based price for greenhouse gases. To capture the effect on innovation, an approximation for innovation in the form of patent counts have been employed using the patent category Y02 constructed by the EPO. The result suggests that green innovation is affected by the price of the EUA, total CO2 emissions and tax revenue from energy. This study employed a knowledge stock variable that was not found to be significant, contrary to previous literature on induced innovation. The incidence rate ratio associated with the  permits price indicates that a one euro increase in price would result in a 1.135 % increase in the patenting of green technology. The result suggests that a higher price in  permits would stimulate innovation of green technology within the European Union.

The aim of this thesis is to study the role that policy measures and market mechanisms have played in promoting innovation in metal recycling from end-of-life vehicles. This is achieved using an econometric analysis and the panel data negative binomial regression model. The data cover 16 OECD countries over 24 years (1980-2003). Patent applications are used as a proxy for innovation, and with sole focus on end-of-life vehicle metal waste (i.e., classification codes IPC B62D67 and B30B9/32). The empirical results suggest that innovations in this field have been influenced by the presence of national regulations, the introduction of the EU end-of-life vehicle directive, the level of primary steel production and the cost of labor in the respective countries. The results also indicate that the influence of labor costs on innovation is greater in countries with high primary steel production levels compared to countries with low production of primary steel. / Syftet med denna uppsats är att undersöka vilken roll som politiska styrmedel och olika marknadsmekanismer har spelat för att främja innovation inom metallåtervinning från uttjänta fordon. Detta åstadkoms genom en ekonometrisk analys baserat på en negativ binomial regressionsmodell och ett paneldataset. Data utgörs av 16 OECD länder över en tidsperiod på 24 år (1980–2003). Antalet patentansökningar används som approximation för innovation och fokus är metallåtervinning från uttjänta fordon (klassificeringskoderna IPC B62D67 och B30B9/32). De empiriska resultaten visar att innovationsbenägenheten inom detta område har påverkats av förekomsten av nationella regleringar, EU-direktivet för uttjänta fordon, nivån på den primära stålproduktionen och kostnaden för arbetskraft. Resultaten visar även att effekten av arbetskraftskostnad på innovationsbenägenheten är större i länder med hög primär stålproduktion jämfört med länder med låg motsvarande produktion.