This research examines the effects of environmental regulation on technology innovation, with particular focus on technology intensity and firm size. Our analyses show that environmental regulations were less likely to affect innovation in the case of medium-high technology intensity (e.g., electrics, chemicals, and vehicles) where there is explicit market demand for low-carbon and eco-friendly products. Results were also statistically insignificant for firms with high technology intensity. Our results demonstrate that due to the uneven effects of regulatory policies across firms, the patterns of innovation vary. Regarding the interaction between firm size and technology intensity, the technology innovation of medium- and large-sized firms with medium-high technology intensity were more likely to be affected by environmental regulations, unlike their counterparts with different levels of technology intensity. These findings help distinguish between firms that should continue innovating with existing regulations and those for which non-regulatory measures are more effective.

[Key Words] Environmental regulation, Technological innovation, Technology intensity, Firm size