IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v28y2005i3p309-326.html
   My bibliography  Save this article

Environmental Externalities in the Presence of Network Effects: Adoption of Low Emission Technologies in the Automobile Market

Author

Listed:
  • Eftichios Sartzetakis
  • Panagiotis Tsigaris

Abstract

The paper considers a market currently dominated by a dirty technology that imposes significant environmental costs. A clean technology, with zero environmental costs, is introduced after the maturity of the dirty technology’s network. Adoption of the clean technology is not possible due to the network benefits in favour of the dirty technology. The paper considers two types of policy intervention to correct for the environmental externality. First, we find that the tax necessary to induce adoption of the clean technology is very high implying that a tax equal to the marginal environmental damage would not resolve the externality problem in many cases. Second, if tax revenues are earmarked towards subsidizing the clean technology, the tax is lower than in the previous case and can be set equal to the marginal external damage. Copyright Springer Science+Business Media, Inc. 2005

Suggested Citation

  • Eftichios Sartzetakis & Panagiotis Tsigaris, 2005. "Environmental Externalities in the Presence of Network Effects: Adoption of Low Emission Technologies in the Automobile Market," Journal of Regulatory Economics, Springer, vol. 28(3), pages 309-326, November.
    • Handle: RePEc:kap:regeco:v:28:y:2005:i:3:p:309-326
    DOI: 10.1007/s11149-005-3961-3
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11149-005-3961-3
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11149-005-3961-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James Foreman Peck, 1996. "Technological Lock-in and the Power Source for the Motor Car," Oxford Economic and Social History Working Papers _007, University of Oxford, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mads Greaker & Kristoffer Midttømme, 2014. "Optimal Environmental Policy with Network Effects: Will Pigovian Taxation Lead to Excess Inertia?," CESifo Working Paper Series 4759, CESifo.
    2. Greaker, Mads & Midttømme, Kristoffer, 2016. "Network effects and environmental externalities: Do clean technologies suffer from excess inertia?," Journal of Public Economics, Elsevier, vol. 143(C), pages 27-38.
    3. Dietrich, Antje-Mareike, 2017. "Platform intermediation to sponsor alternative fuel vehicles," Transport Policy, Elsevier, vol. 54(C), pages 90-99.
    4. Dietrich, Antje-Mareike, 2016. "Governmental platform intermediation to promote alternative fuel vehicles," Economics Department Working Paper Series 16, Technische Universität Braunschweig, Economics Department.
    5. Antje-Mareike Dietrich & Gernot Sieg, 2014. "Welfare Effects of Subsidizing a Dead-End Network of Less Polluting Vehicles," Networks and Spatial Economics, Springer, vol. 14(3), pages 335-355, December.
    6. Perdiguero, Jordi & Jiménez, Juan Luis, 2011. "Sell or not sell biodiesel: Local competition and government measures," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(3), pages 1525-1532, April.
    7. Meunier, Guy & Ponssard, Jean-Pierre, 2020. "Optimal policy and network effects for the deployment of zero emission vehicles," European Economic Review, Elsevier, vol. 126(C).
    8. Slivko, Olga, 2012. "Direct and indirect subsidies in markets with system goods in the presence of externalities. Preliminary version," Working Papers 2072/211631, Universitat Rovira i Virgili, Department of Economics.
    9. Wenli Cheng & Dingsheng Zhang, 2021. "Optimal Environmental Tax-Subsidy Regime in the Presence of Increasing Returns," Annals of Economics and Finance, Society for AEF, vol. 22(2), pages 525-540, November.
    10. Jin, Wei, 2021. "Path dependence, self-fulfilling expectations, and carbon lock-in," Resource and Energy Economics, Elsevier, vol. 66(C).
    11. Greaker, Mads & Midttømme, Kristoffer, 2013. "Optimal Environmental Policy with Network Effects: Is Lock-in in Dirty Technologies Possible?," Memorandum 15/2013, Oslo University, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:oxf:wpaper:69.2 is not listed on IDEAS
    2. Kevin Marechal & Nathalie Lazaric, 2010. "Overcoming inertia: insights from evolutionary economics into improved energy and climate policies," Climate Policy, Taylor & Francis Journals, vol. 10(1), pages 103-119, January.
    3. Malerba, Franco, 2002. "Sectoral systems of innovation and production," Research Policy, Elsevier, vol. 31(2), pages 247-264, February.
    4. Liam Brunt, 1999. "An Arbitrage Model in Crop Rotation in 18th Century England," Economics Series Working Papers 1999-W32, University of Oxford, Department of Economics.
    5. Paul A. David & Gavin Wright, "undated". "General Purpose Technologies and Surges in Productivity: Historical Reflections on the Future of the ICT Revolution," Working Papers 99026, Stanford University, Department of Economics.
    6. Nathalie Lazaric & Kevin Maréchal, 2010. "Overcoming inertia: insights from evolutionary economics into improved energy and climate policy," Post-Print hal-00452205, HAL.
    7. Marechal, Kevin, 2007. "The economics of climate change and the change of climate in economics," Energy Policy, Elsevier, vol. 35(10), pages 5181-5194, October.
    8. J.Humphries & T. Leunig, 2007. "Cities, Market Integration and Going to Sea: Stunting and the standard of living in early nineteenth-century England and Wales," Oxford University Economic and Social History Series _066, Economics Group, Nuffield College, University of Oxford.
    9. Foray, Dominique, 1997. "The dynamic implications of increasing returns: Technological change and path dependent inefficiency," International Journal of Industrial Organization, Elsevier, vol. 15(6), pages 733-752, October.
    10. Chris Ivory & Audley Genus, 2010. "Symbolic consumption, signification and the 'lockout' of electric cars, 1885-1914," Business History, Taylor & Francis Journals, vol. 52(7), pages 1107-1122.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:regeco:v:28:y:2005:i:3:p:309-326. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.