Does intellectual property rights protection help reduce carbon emissions?

The research addresses the crucial question of intellectual property rights protection's (IPRP) impact on carbon emissions (CE) amidst growing environmental concerns. Existing research emphasizes IPRP's role in innovation and economic growth, with some arguing it incentivizes R&D and others suggesting it might hinder technological progress in developing countries through limitations on "imitation." However, the environmental implications of IPRP, particularly its effect on CE, remain largely unexplored. While some studies focusing on specific countries suggest either positive or negative effects, a global perspective and a clear understanding of the underlying mechanisms are lacking. This study aims to fill these gaps by investigating the global relationship between IPRP and CE, examining the mediating effects of energy structure (ES) improvement, technological progress (TP), and economic growth (EG), and considering the moderating effect of political stability (PS). The study's importance stems from the need to inform policy decisions that balance economic development goals with the urgent need for global decarbonization. Understanding the complex interplay between IPRP and CE is crucial for formulating effective global carbon reduction strategies.

The literature review explores the existing research on IPRP and its impact on the environment. Studies have examined IPRP's role in fostering innovation in clean technologies and incentivizing eco-friendly technological innovation. It highlights how patent protections can stimulate investment in low-carbon technologies but also acknowledges that market demands and profit motives can direct innovation towards high-carbon industries, potentially increasing CE. The review discusses the potential for IPRP to exacerbate market failures by creating monopolies or oligopolies in the market for clean technologies. The Environmental Kuznets Curve (EKC) hypothesis is introduced, suggesting an inverted U-shaped relationship between environmental degradation and economic development. The impact of IPRP's global intensification on developing countries that rely heavily on high-carbon energy sources and lack the resources to invest in green technologies is also considered. The review sets the stage for exploring the mediating roles of energy structure, technological progress, and economic growth, as well as the moderating effect of political stability on the IPRP-CE relationship.

The study employs a fixed-effects model using unbalanced panel data from 116 countries between 2008 and 2020 to analyze the relationship between IPRP and CE. The dependent variables are total carbon emissions (TCE) and carbon emissions per capita (CEP). The core explanatory variable is the intellectual property rights protection index from the International Property Rights Union, chosen due to the unavailability of annual data for commonly used indices. Mediating variables include ES (proportion of renewable energy consumption), TP (R&D activity index from UNCTAD), and EG (per capita GDP). The moderating variable is PS (political stability and absence of violence index from the World Bank). Control variables include trade openness, industrial structure, and urbanization. Robust standard errors are clustered at the national level, and variables (except for ratio variables) are log-transformed. A causal stepwise regression method is used to test the mediating effects of ES, TP, and EG. Moderating effects of PS are examined by incorporating interaction terms. Robustness checks include replacing the core explanatory variable, dependent variable, excluding data from 2019 onwards, and conducting an endogeneity analysis using two-stage least squares (2SLS) with instrumental variables (Rule of Law and lagged IPRP). Heterogeneity analysis is performed based on income groups (high-income, upper-middle-income, and lower-middle-income countries). Nonlinear analysis is conducted by incorporating a quadratic term of IPRP into the model to explore an inverted U-shaped relationship.

The baseline results show a significant positive relationship between IPRP and CE, supporting the hypothesis that IPRP promotes CE increase. This finding is robust across various robustness checks, including using different IPRP proxies, dependent variables, and addressing endogeneity. Heterogeneity analysis reveals differences across income groups; IPRP reduces CE in high and upper-middle-income countries but increases CE in lower-middle-income countries. Mediation analysis confirms that IPRP indirectly increases CE through inhibiting energy structure improvement, promoting technological progress in high-carbon sectors, and promoting economic growth in those same sectors. Moderation analysis indicates that political stability significantly mitigates the positive impact of IPRP on CE. Nonlinear analysis reveals an inverted U-shaped relationship between IPRP and CE, with IPRP initially promoting CE increase but suppressing it after reaching a threshold point (approximately 1.8). The inflection point indicates a turning point beyond which intensified IPRP starts to reduce CE.

The findings challenge the traditional view that IPRP unconditionally promotes environmental sustainability. The positive relationship between IPRP and CE highlights the complexity of the issue. The mediating effects emphasize the importance of considering the type of technological progress and economic growth fostered by IPRP. The study underscores the need for policies that support the development and adoption of low-carbon technologies while mitigating the potential for IPRP to incentivize high-carbon activities. The moderating role of political stability suggests that strong institutions and effective policy implementation are crucial for achieving environmental sustainability. The inverted U-shaped relationship highlights the importance of considering the stage of economic development and the dynamic impacts of IPRP. The results offer valuable insights for policymakers seeking to reconcile economic growth with climate change mitigation goals.

The study's main contribution lies in providing empirical evidence for the complex and multifaceted relationship between IPRP and CE. The findings highlight the need for nuanced policy interventions that promote green innovation while minimizing the adverse effects of IPRP on carbon emissions. Future research could explore regional variations, investigate the specific types of technologies affected by IPRP, and examine the impact of different IPRP regimes.

The study's limitations include potential challenges in the precise measurement of IPRP and CE, given data availability and quality. The complexities of political stability and other moderating variables are acknowledged, as various factors influence these variables. The study primarily focuses on a global analysis and might not capture country-specific nuances.