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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.
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    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.
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    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.
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    Cited by:

    1. Wang, Xue & Fan, Li-Wei & Zhang, Hongyan, 2023. "Policies for enhancing patent quality: Evidence from renewable energy technology in China," Energy Policy, Elsevier, vol. 180(C).
    2. Wilson, Kenneth & Vellinga, Nico, 2022. "Natural resource dependence and innovation efficiency reconsidered," Resources Policy, Elsevier, vol. 77(C).

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