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More where that came from: Induced innovation in the american oil and gas sectors

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  • Daniels, Bryce
  • Johnson, Daniel K.N.

Abstract

Induced innovation theory suggests that a change in relative input prices will result in a substitution effect not only toward cheaper alternatives, but toward innovative activity that will lead to new alternatives. Here we test whether the same holds true for output prices: does innovation in the oil and gas sector respond positively to a rise in energy prices? We model the share of total granted U.S. patents that are related to oil and gas as a function of expected future commodity prices, production levels of each commodity and previous innovations (or stocks of knowledge). We find a significant, positive and highly elastic correlation between expected commodity prices and innovation.

Suggested Citation

  • Daniels, Bryce & Johnson, Daniel K.N., 2019. "More where that came from: Induced innovation in the american oil and gas sectors," Resources Policy, Elsevier, vol. 64(C).
  • Handle: RePEc:eee:jrpoli:v:64:y:2019:i:c:s0301420719303472
    DOI: 10.1016/j.resourpol.2019.101451
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    References listed on IDEAS

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    1. Joseph M. Crabb & Daniel K.N. Johnson, 2010. "Fueling Innovation: The Impact of Oil Prices and CAFE Standards on Energy-Efficient Automotive Technology," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 199-216.
    2. Kortum, Samuel & Lerner, Josh, 1998. "Stronger protection or technological revolution: what is behind the recent surge in patenting?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 247-304, June.
    3. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    4. Daniel K. N. Johnson & Alyn Siripong & Amy S. Brown, 2006. "The Demise of Distance? The Declining Role of Physical Proximity for Knowledge Transmission," Growth and Change, Wiley Blackwell, vol. 37(1), pages 19-33, March.
    5. Adam B. Jaffe & Manuel Trajtenberg & Michael S. Fogarty, 2000. "The Meaning of Patent Citations: Report on the NBER/Case-Western Reserve Survey of Patentees," NBER Working Papers 7631, National Bureau of Economic Research, Inc.
    6. Daniel Johnson & Kristina Lybecker, 2012. "Does Distance Matter Less Now? The Changing Role of Geography in Biotechnology Innovation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(1), pages 21-35, February.
    7. Shunsuke Managi & James Opaluch & Di Jin & Thomas Grigalunas, 2006. "Alternative technology indexes in the offshore oil and gas industry," Applied Economics Letters, Taylor & Francis Journals, vol. 13(10), pages 659-663.
    8. David Popp, 2006. "They Don'T Invent Them Like They Used To: An Examination Of Energy Patent Citations Over Time," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(8), pages 753-776.
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    Keywords

    Energy; Oil; Gas; Innovation; Induced innovation; Patent;

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