Market and non-market strategies of environmental technology in Germany

This paper compares the contributions of market-based and non-market-based environmental policies to environmental technologies for Germany, which is among the leading countries on a global scale in the context of environmental technologies and environmental regulation policies. In this context, the effects of economic growth and financial development, as well as two different environmental policy strategies, on environmental technologies are investigated through the novel dynamic ARDL and machine learning based KRLS technique in the period 1990-2020. The results show that the positive effects of economic growth and financial development on environmental technologies have marginal efficiency that first increases and then decreases in direct proportion to the increase in the level of technological development. On the other hand, at the current level of environmental technologies, market-based strategies seem to have positive effects, whereas non-market-based strategies hinder innovative activities. In the later stages of technological progress, the roles of these strategies change, and non-market-based strategies become more marginally efficient.