The aim of the Integrated Product Policy (IPP) is to promote product-related eco-innovations. These, in turn, depend on both support for the development of environmentally-friendly products and stimulation of demand for such products. However, it is companies that play the crucial role in the ecological optimisation of products as it is they who during the R&D phase - determine the basic environmental characteristics for the product utilisation and disposal phases. This paper therefore examines the main determinants and effects of environmental product innovations, including several case studies of companies in the German manufacturing sector. With regard to the possible determinants of ecological product innovations, regulation appears to be one of the main drivers of ecological innovation. New technology is the second most important stimulus. An increasing number of firms from different industries have identified the ecological and economic potential which lies in the consumption and waste disposal phases. Nevertheless, eco-efficient products still have to grapple with the problem of weak market performance. Neither eco-labels nor life-cycle analyses appear to be of great significance for innovating firms as they are especially in the short term- far too costly and time-consuming. On the other hand, instruments which take account of manufacturers product responsibility appear to have a major impact on ecological product design.
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