Role of Local Governmental Research Institutes in Development and Diffusion of Pollution Control Technologies in Japan

When certain kinds of environmental regulation are introduced, enterprises are, in many cases, forced to attain the target technologically. The types of environmental policy instruments that exert a strong incentive to develop or diffuse environmental technologies have been discussed theoretically in environmental economics.1 Most of the analysis, however, regards the response of enterprises to environmental policies as a ‘black box’, that is, enterprise incentives for innovation in pollution control are measured as the amount of the cost savings in the abatement cost if innovation in abatement technology occurs, and it assumes that the introduction of regulations automatically leads to implementation of measures for pollution control.