David Bonilla^a,
Justin D.K. Bishop^b,
Colin J. Axon^c,
David Banister^d



Highlights

•The propensity to develop emissions control responds to pollution control laws in Japan.
•The propensity of engine efficiency innovation responds to car markets.
•Declines in loan rates stimulated the propensity to develop emissions controls techniques.
•Publicly funded R&D supports innovation of engine efficiency.
•Price effects on innovation outweigh that of the US CAFE standards.



Keywords
Corporate R&D performance; Economics of innovation; Fuel efficiency; Vehicle engines



Abstract
This paper uses a patent data set to identify factors fostering innovation of diesel engines between 1974 and 2010 in the OECD region. The propensity of engine producers to innovate grew by 1.9 standard deviations after the expansion of the car market, by 0.7 standard deviations following a shift in the EU fuel economy standard, and by 0.23 standard deviations. The propensity to develop emissions control techniques was positively influenced by pollution control laws introduced in Japan, in the US, and in the EU, but not with the expansion of the car market. Furthermore, a decline in loan rates stimulated the propensity to develop emissions control techniques, which were simultaneously crowded out by increases in publicly-funded transport research and development. Innovation activities in engine efficiency are explained by market size, loan rates and by (Organisation for Economic Cooperation and Development) diesel prices, inclusive of taxes. Price effects on innovation, outweigh that of the US corporate average fuel economy standards. Innovation is also positively influenced by past transport research and development.



Article Outline
1. Introduction
2. Background
3. Approach
4. Method
5. Results: factors for engine efficiency and air pollution innovation
6. Innovation intensity
7. Conclusions
Acknowledgements
References




Figures
   

Fig. 1.

Diesel engine patent counts: US, Japan, EU and rest of the world. Note: Annual number of patents by date of publication.



Fig. 2.

Pollution control innovations for ‘diesel and exhaust gas’ engines. Note: counts by year of publication.


Fig. 3.

Innovations for diesel vehicle engines.


Fig. 4.

Public funding for R&D in transport between 1974 and 2010 for the OECD countries. Note: Data are in $million in constant 2011 prices and exchange rates. The EU in this context includes 21 nations. Transport RD is classified by the International Energy Agency (2011a) as including categories of RD for ‘on road vehicles’, ‘vehicle batteries’, ‘advanced power electronics’, ‘motors’, ‘advanced combustion engines’, ‘electric vehicle infrastructure’, ‘fuel for on-road vehicles’ ‘material for on road vehicles’, ‘unallocated transport’, ‘off road transport and transport systems’, as well as other transport. The IEA does not report a breakdown for RD investment of these classifications for all years but the ’on road vehicles’ is the main item in 2010.


Fig. 5.

Annual patent activity and the share of diesel car sales lagged 1 year for European Union data.


Fig. 6.

Innovation intensity (patents per public funding R&D in transport in $millions at 2011 prices.




Tables

Table 1. Summary of data used, 1974–2010.

Table 2. Results: Propensity for diesel engine efficiency innovation, 1974–2008.

Table 3. Results: Propensity for emissions control innovation, 1984–2010.

Table 4. Results: Growth of engine efficiency innovation; 1984–2010.