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Market competition and the adoption of clean technology: Evidence from the taxi industry

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  • Bajo-Buenestado, Raúl
  • Borrella-Mas, Miguel Ángel

Abstract

Environmental policies may be ineffective when firms lack incentives to adopt cleaner technologies due to their market power. This paper examines whether a competition shock in a concentrated industry can stimulate the adoption of policy-favored cleaner technologies. Using a unique panel dataset covering the universe of vehicles purchased by taxi drivers in Spain, we exploit the entry of ride-hailing platforms as a natural experiment to identify the impact on their vehicle choices. We find that increased competition led to a 30% surge in the adoption of electric-powered vehicles among taxi drivers. Back-of-the-envelope calculations suggest an overall reduction in CO2 emissions, highlighting the potential of competition policy to promote environmental sustainability while mitigating market power.

Suggested Citation

  • Bajo-Buenestado, Raúl & Borrella-Mas, Miguel Ángel, 2025. "Market competition and the adoption of clean technology: Evidence from the taxi industry," European Economic Review, Elsevier, vol. 174(C).
    • Handle: RePEc:eee:eecrev:v:174:y:2025:i:c:s0014292125000170
    DOI: 10.1016/j.euroecorev.2025.104967
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    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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