  In the era of sustainability, firms grapple with the decision of how much to
invest in green innovation and how it influences their economic trajectory.
This study employs the Crepon, Duguet, and Mairesse (CDM) framework to examine
the conversion of R&D funds into patents and their impact on productivity,
effectively addressing endogeneity by utilizing predicted dependent variables
at each stage to exclude unobservable factors. Extending the classical CDM
model, this study contrasts green and non-green innovations' economic effects.
The results show non-green patents predominantly drive productivity gains,
while green patents have a limited impact in non-heavy polluting firms.
However, in high-pollution and manufacturing sectors, both innovation types
equally enhance productivity. Using unconditional quantile regression, I found
green innovation's productivity impact follows an inverse U-shape, unlike the
U-shaped pattern of non-green innovation. Significantly, in the 50th to 80th
productivity percentiles of manufacturing and high-pollution firms, green
innovation not only contributes to environmental sustainability but also
outperforms non-green innovation economically.
