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Competing Recombinant Technologies for Environmental Innovation: Extending Arthur's Model of Lock-In

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  • Paolo Zeppini
  • Jeroen C. J. M. van den Bergh

Abstract

This article presents a model of sequential decisions about investments in environmentally dirty and clean technologies, which extends the path-dependence framework of B. Arthur (1989, Competing technologies, increasing returns, and lock-in by historical events, The Economic Journal, 99, pp. 116-131). This allows us to evaluate if and how an economy locked into a dirty technology can be unlocked and move towards clean technology. The main extension involves the inclusion of the effect of recombinant innovation of the two technologies. A mechanism of endogenous competition is described involving a positive externality of increasing returns to investment which are counterbalanced by recombinant innovation. We determine conditions under which lock-in can be avoided or escaped. A second extension is “symmetry breaking” of the system due to the introduction of an environmental policy that charges a price for polluting. A final extension adds a cost of environmental policy in the form of lower returns on investment implemented through a growth-depressing factor. We compare cumulative pollution under different scenarios, so that we can evaluate the combination of environmental regulation and recombinant innovation.

Suggested Citation

  • Paolo Zeppini & Jeroen C. J. M. van den Bergh, 2011. "Competing Recombinant Technologies for Environmental Innovation: Extending Arthur's Model of Lock-In," Industry and Innovation, Taylor & Francis Journals, vol. 18(3), pages 317-334.
  • Handle: RePEc:taf:indinn:v:18:y:2011:i:3:p:317-334
    DOI: 10.1080/13662716.2011.561031
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    References listed on IDEAS

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    1. Zeppini, Paolo & van den Bergh, Jeroen C.J.M., 2013. "Optimal diversity in investments with recombinant innovation," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 141-156.
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    Cited by:

    1. Dumas, Marion & Rising, James & Urpelainen, Johannes, 2016. "Political competition and renewable energy transitions over long time horizons: A dynamic approach," Ecological Economics, Elsevier, vol. 124(C), pages 175-184.
    2. Grazia Cecere & Nicoletta Corrocher & Cédric Gossart & Muge Ozman, 2014. "Lock-in and path dependence: an evolutionary approach to eco-innovations," Journal of Evolutionary Economics, Springer, vol. 24(5), pages 1037-1065, November.
    3. repec:eee:ecolec:v:137:y:2017:i:c:p:37-46 is not listed on IDEAS
    4. Quatraro, Francesco & Scandura, Alessandra, 2018. "Academic Inventors and the Antecedents of Green Technologies. A Regional Analysis of Italian Patent Data," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201802, University of Turin.
    5. Zeppini, Paolo, 2015. "A discrete choice model of transitions to sustainable technologies," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 187-203.
    6. Koen Frenken & Luis R. Izquierdo & Paolo Zeppini, 2012. "Recombinant Innovation and Endogenous Transitions," Working Papers 12-01, Eindhoven Center for Innovation Studies, revised Jan 2012.
    7. Lopolito, A. & Morone, P. & Taylor, R., 2013. "Emerging innovation niches: An agent based model," Research Policy, Elsevier, vol. 42(6), pages 1225-1238.
    8. Schmidt, Tobias S. & Battke, Benedikt & Grosspietsch, David & Hoffmann, Volker H., 2016. "Do deployment policies pick technologies by (not) picking applications?—A simulation of investment decisions in technologies with multiple applications," Research Policy, Elsevier, vol. 45(10), pages 1965-1983.
    9. Safarzyńska, Karolina & Frenken, Koen & van den Bergh, Jeroen C.J.M., 2012. "Evolutionary theorizing and modeling of sustainability transitions," Research Policy, Elsevier, vol. 41(6), pages 1011-1024.
    10. 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.
    11. Timothy J. Foxon & Jonathan Köhler & Jonathan Michie & Christine Oughton, 2013. "Towards a new complexity economics for sustainability," Cambridge Journal of Economics, Oxford University Press, vol. 37(1), pages 187-208.
    12. Papachristos, George, 2017. "Diversity in technology competition: The link between platforms and sociotechnical transitions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 291-306.
    13. Jeroen Bergh & Giorgos Kallis, 2013. "A survey of evolutionary policy: normative and positive dimensions," Journal of Bioeconomics, Springer, vol. 15(3), pages 281-303, October.

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