For over 30 years environmental policy has developed under the assumption that self-interest explains firms' environmental behaviour and that the problem of pollution can be rectified by technological fixes. This policy paradigm has been proved wrong: entrenched antagonism between firms and regulators, and greater environmental harm, have proved to be the dominant outcomes. This book re-focuses environmental policy analysis by demonstrating how behavioural models can be applied within the field to better understand the propensity of the firm to engage in pro-environmental, innovative activities. The book develops an essential tool for environmental policy analysis in the context of technical change. A rigorous theoretical and methodological framework is applied to identify sources of firms' willingness (or resistance) to engage in cleaner production and to evaluate under which conditions the firm's pro-environmental, innovative behaviour may be fostered. The author undertakes extensive research through a case study of the In-Bond industry in Mexico and assesses the significance and relationship of individual factors relating to a firm's innovative behaviour towards 'greener' production. The model developed helps to understand the planned behaviour of the firm in specific contexts, to shape and guide empirical inquiry, and to produce useful corporate and public policy recommendations. Environmental Policy and Technological Innovation comprehensively explores the factors which can influence a firm's behavioural approach towards developing clean technologies. Unlike many other studies on environmental policy, it addresses the origin of the problems and not just the symptoms. It will become an indispensable companion for local, national and international environmental regulators, environmental policymakers and analysts, and those interested in technological innovation and technology policy.