IDEAS home Printed from https://ideas.repec.org/p/hhs/ratioi/0362.html
   My bibliography  Save this paper

Interest groups and thefailure of transformativeinnovation policy - Insights from the ethanolcar bubble in Sweden 2003-2013

Author

Listed:

Abstract

Literature on innovation policy has so far paid little attention to policy failure and the mechanisms leading to failure. We describe the Swedish bubble in ethanol cars 2003-2013 and explain why well intended policies may end up with unsatisfactory results. Directives from the European Union forced policymakers in Sweden to act swiftly and the Swedish government put in place The Pump law which forced gas stations to supply ethanol as a fuel from 2006 and onwards. In combination with targeted tax deductions for ethanol cars, a sharp increase in demand took place in 2006-2008. As these started to experience engine problems by 2009-2010, demand declined. Tax deductions were subsequently altered in order to also include cars with very low CO2 emissions, a shift that contributed further to the downfall of ethanol cars. Our data suggests that domestic car manufacturers Volvo and Saab, along with Ford benefited from the ethanol policies as their combined market share for green cars surged from 12 to 75 percent 2005-2008. Ethanol was competitive in the political domain as the fuel was backed by the Centre Party and the associated farmers’ lobby group, but lacked economic, technological and environmental competitiveness. Our findings suggest that innovation policies aimed at supporting new technologies against vested interests may instead end up extending established interests as policies are put in place under the influence of various stakeholders.

Suggested Citation

  • Björnemalm, Rickard & Sandström, Christian, 2023. "Interest groups and thefailure of transformativeinnovation policy - Insights from the ethanolcar bubble in Sweden 2003-2013," Ratio Working Papers 362, The Ratio Institute, revised 05 Sep 2022.
    • Handle: RePEc:hhs:ratioi:0362
    as

    Download full text from publisher

    File URL: https://cms.ratio.se/app/uploads/2023/05/ratio-working-paper-no.-362-ethanol-cars-paper-manuscript-3.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cristian Huse & Claudio Lucinda, 2014. "The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish Green Car Rebate," Economic Journal, Royal Economic Society, vol. 124(578), pages 393-419, August.
    2. Carlsson, B & Stankiewicz, R, 1991. "On the Nature, Function and Composition of Technological Systems," Journal of Evolutionary Economics, Springer, vol. 1(2), pages 93-118, April.
    3. Kärnä, Anders & Karlsson, Johan & Engberg, Erik & Svensson, Peter, 2020. "Political Failure: A Missing Piece in Innovation Policy Analysis," Working Paper Series 1334, Research Institute of Industrial Economics, revised 21 Apr 2022.
    4. Geels, Frank W., 2004. "From sectoral systems of innovation to socio-technical systems: Insights about dynamics and change from sociology and institutional theory," Research Policy, Elsevier, vol. 33(6-7), pages 897-920, September.
    5. Cooke, Philip, 2001. "Regional Innovation Systems, Clusters, and the Knowledge Economy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 10(4), pages 945-974, December.
    6. Mariana Mazzucato, 2022. "Financing the Green New Deal," Nature Sustainability, Nature, vol. 5(2), pages 93-94, February.
    7. Schot, Johan & Steinmueller, W. Edward, 2018. "Three frames for innovation policy: R&D, systems of innovation and transformative change," Research Policy, Elsevier, vol. 47(9), pages 1554-1567.
    8. Staffan Jacobsson & Anna Bergek, 2004. "Transforming the energy sector: the evolution of technological systems in renewable energy technology," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 13(5), pages 815-849, October.
    9. Geels, Frank W., 2002. "Technological transitions as evolutionary reconfiguration processes: a multi-level perspective and a case-study," Research Policy, Elsevier, vol. 31(8-9), pages 1257-1274, December.
    10. Christian Sandström & Carl Alm, 2022. "Directionality in Innovation Policy and the Ongoing Failure of Green Deals: Evidence from Biogas, Bio-ethanol, and Fossil-Free Steel," International Studies in Entrepreneurship, in: Karl Wennberg & Christian Sandström (ed.), Questioning the Entrepreneurial State, pages 251-269, Springer.
    Full references (including those not matched with items on IDEAS)

    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. Mattes, Jannika & Huber, Andreas & Koehrsen, Jens, 2015. "Energy transitions in small-scale regions – What we can learn from a regional innovation systems perspective," Energy Policy, Elsevier, vol. 78(C), pages 255-264.
    2. Edsand, Hans, 2016. "Technological Innovation Systems and the wider context: A framework for developing countries," MERIT Working Papers 2016-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Ortt, J. Roland & Kamp, Linda M., 2022. "A technological innovation system framework to formulate niche introduction strategies for companies prior to large-scale diffusion," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    4. Sandén, Björn A. & Hillman, Karl M., 2011. "A framework for analysis of multi-mode interaction among technologies with examples from the history of alternative transport fuels in Sweden," Research Policy, Elsevier, vol. 40(3), pages 403-414, April.
    5. Veldhuizen, Caroline, 2021. "Conceptualising the foundations of sustainability focused innovation policy: From constructivism to holism," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    6. Coenen, Lars & Benneworth, Paul & Truffer, Bernhard, 2012. "Toward a spatial perspective on sustainability transitions," Research Policy, Elsevier, vol. 41(6), pages 968-979.
    7. Konstantinos Koasidis & Alexandros Nikas & Hera Neofytou & Anastasios Karamaneas & Ajay Gambhir & Jakob Wachsmuth & Haris Doukas, 2020. "The UK and German Low-Carbon Industry Transitions from a Sectoral Innovation and System Failures Perspective," Energies, MDPI, vol. 13(19), pages 1-34, September.
    8. Markard, Jochen & Truffer, Bernhard, 2008. "Technological innovation systems and the multi-level perspective: Towards an integrated framework," Research Policy, Elsevier, vol. 37(4), pages 596-615, May.
    9. Rakas, Marija & Hain, Daniel S., 2019. "The state of innovation system research: What happens beneath the surface?," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    10. Francisco Chicombo, Adélia Filosa & Musango, Josephine Kaviti, 2022. "Towards a theoretical framework for gendered energy transition at the urban household level: A case of Mozambique," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    11. Steffen S. Bettin, 2020. "Electricity infrastructure and innovation in the next phase of energy transition—amendments to the technology innovation system framework," Review of Evolutionary Political Economy, Springer, vol. 1(3), pages 371-395, November.
    12. Dahesh, Mehran Badin & Tabarsa, Gholamali & Zandieh, Mostafa & Hamidizadeh, Mohammadreza, 2020. "Reviewing the intellectual structure and evolution of the innovation systems approach: A social network analysis," Technology in Society, Elsevier, vol. 63(C).
    13. Markard, Jochen & Raven, Rob & Truffer, Bernhard, 2012. "Sustainability transitions: An emerging field of research and its prospects," Research Policy, Elsevier, vol. 41(6), pages 955-967.
    14. Pradeep Racherla & Munir Mandviwalla, 2013. "Moving from Access to Use of the Information Infrastructure: A Multilevel Sociotechnical Framework," Information Systems Research, INFORMS, vol. 24(3), pages 709-730, September.
    15. Geels, Frank W. & Kemp, René, 2007. "Dynamics in socio-technical systems: Typology of change processes and contrasting case studies," Technology in Society, Elsevier, vol. 29(4), pages 441-455.
    16. Attila Havas & Doris Schartinger & K. Matthias Weber, 2022. "Innovation Studies, Social Innovation, and Sustainability Transitions Research: From mutual ignorance towards an integrative perspective?," CERS-IE WORKING PAPERS 2227, Institute of Economics, Centre for Economic and Regional Studies.
    17. van Geenhuizen, Marina & Ye, Qing, 2014. "Responsible innovators: open networks on the way to sustainability transitions," Technological Forecasting and Social Change, Elsevier, vol. 87(C), pages 28-40.
    18. Fabíola Sostmeyer Polita & Lívia Madureira, 2021. "Evolution of Short Food Supply Chain Innovation Niches and Its Anchoring to the Socio-Technical Regime: The Case of Direct Selling through Collective Action in North-West Portugal," Sustainability, MDPI, vol. 13(24), pages 1-24, December.
    19. Kejia Yang & Johan Schot & Bernhard Truffer, 2020. "Shaping the Directionality of Sustainability Transitions: The Diverging Development Patterns of Solar PV in Two Chinese Provinces," SPRU Working Paper Series 2020-14, SPRU - Science Policy Research Unit, University of Sussex Business School.
    20. Smith, Adrian & Voß, Jan-Peter & Grin, John, 2010. "Innovation studies and sustainability transitions: The allure of the multi-level perspective and its challenges," Research Policy, Elsevier, vol. 39(4), pages 435-448, May.

    More about this item

    Keywords

    Ethanol car; policy failure; innovation; technology; environment.;
    All these keywords.

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:hhs:ratioi:0362. 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: Martin Korpi (email available below). General contact details of provider: https://edirc.repec.org/data/ratiose.html .

    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.