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Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry

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  • Philippe Aghion
  • Antoine Dechezleprêtre
  • David Hemous
  • Ralf Martin
  • John Van Reenen

Abstract

Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18596.

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Date of creation: Dec 2012
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Handle: RePEc:nbr:nberwo:18596

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Citations

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Cited by:
  1. Lionel Nesta & Francesco Vona & Francesco Nicolli, 2012. "Environmental Policies, Product Market Regulation and Innovation in Renewable Energy," Working Papers 2012.90, Fondazione Eni Enrico Mattei.
  2. Garth Heutel & Carolyn Fischer, 2013. "Environmental Macroeconomics: Environmental Policy, Business Cycles, and Directed Technical Change," NBER Working Papers 18794, National Bureau of Economic Research, Inc.
  3. Martin Wörter & Tobias Stucki & Christian Soltmann, 2013. "The Performance Effect of Environmental Innovations," KOF Working papers 13-330, KOF Swiss Economic Institute, ETH Zurich.
  4. Rob Aalbers & Victoria Shestalova & Viktoria Kocsis, 2012. "Innovation policy for directing technical change in the power sector," CPB Discussion Paper 223, CPB Netherlands Bureau for Economic Policy Analysis.
  5. Veugelers, Reinhilde, 2012. "Inducing private clean innovations," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/350699, Katholieke Universiteit Leuven.
  6. Joëlle Noailly & Roger Smeets, 2013. "Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data," CPB Discussion Paper 237, CPB Netherlands Bureau for Economic Policy Analysis.
  7. Veugelers, Reinhilde, 2012. "Which policy instruments to induce clean innovating?," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/357496, Katholieke Universiteit Leuven.
  8. Veugelers, Reinhilde, 2011. "Activating the private clean innovation machine," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/327119, Katholieke Universiteit Leuven.

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