The global climate crisis demands a faster shift towards sustainability. Studying the costs and benefits of technology related to environmental regulation can help accelerate this shift. This paper presents a method to estimate technological gains and losses from environmental regulation through patent rights. I apply this method to an international environmental agreement, the Kigali Amendment. The approach combines two structural estimations and a synthetic control group. I develop a patent renewal model with exogenous environmental regulation. The probability of regulation increases over time, but patent holders are myopic about it. Identification exploits differences in patent renewal rates between affected and control patents. Using a unique dataset on patents mentioning regulated substances and their substitutes, I estimate the technological impact of the amendment. Results show average private monetary gains of up to €40,000 per cohort and no losses. Counterfactual estimations show the largest gains for shocks contemporaneous to the signature.
Download