This thesis investigates, at the country level, the relationship between innovation output or generation of new technology and input factors such as stock of knowledge, research effort and institutional factors such as competition and intellectual property rights. It is shown that variations in generation of new technology reflect differences in knowledge stock, research effort, product market competition and other institutional factors of OECD countries. The available stock of knowledge and the research effort was shown to have a linear and positive effect on technology generation. It was also shown that the degree of product market competition has a nonlinear effect on technology growth, thereby confirming on a country-level an inverted-U relationship between competition and innovation. Generation of new knowledge was examined using a knowledge production function with annual and accumulated knowledge measured with a patent indicator based on a worldwide count of patent priority filings. A cross-sectional linear regression model was used with secondary data. Independent variables included were the main variables accumulated stock of patent priority filings, the number of FTE researchers in R&D and the Product Market Regulation Index. Institutional bias was accounted for by including the independent variables Index of Patent Rights, administrative patenting fees and a Global Competitiveness Index. The Global Competitiveness index was found to have positive effect on patent productivity and the administrative patenting fees relationship was found to be negative. The results are consistent with theories and empirical findings. The results also highlight the importance of innovation policies that keep costs of patenting low and of adjusting the competition policy of a country to the type of economy in question.

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.