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Explaining the Slow Pace of Energy Technological Innovation: Why Market Conditions Matter

Listed author(s):
  • Jin, Wei
  • Zhang, ZhongXiang

As a useful complement to numerous innovation policy studies from a normative perspective, this paper provides a positive framework to analyze the basic economic mechanism of energy technological innovation and explain its slow pace of technological progress. We find that the capital-intensiveness of energy technology is an inhibiting factor to catalyze market size effect and slows innovations and diffusions of energy technology in the market. We also show that the substantial homogeneity of energy products leads to both a monopolistic market structure on the supply side and a weak level of positive pecuniary externality on the demand side, both dampening the incentive of innovation. On the basis of our economic analysis, we recommend that a package of 􀁓􀁒􀁏􀁌􀁆􀁜􀀃􀁕􀁈􀁖􀁓􀁒􀁑􀁖􀁈􀁖􀀃􀁗􀁒􀀃􀁄􀁆􀁆􀁈􀁏􀁈􀁕􀁄􀁗􀁌􀁑􀁊􀀃􀁈􀁑􀁈􀁕􀁊􀁜􀀃􀁌􀁑􀁑􀁒􀁙􀁄􀁗􀁌􀁒􀁑􀀃􀁖􀁋􀁒􀁘􀁏􀁇􀀃􀁌􀁑􀁆􀁏􀁘􀁇􀁈􀀃􀀔􀀌􀀃􀁇􀁒􀁚􀁑􀁖 􀁌􀁝􀁌􀁑􀁊􀀃􀂳􀁋􀁈􀁄􀁙􀁜􀂴􀀃 assets of energy technologies; 2) deregulating monopolistic energy-supplying markets; and 3) differentiating the homogenous energy products.

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Paper provided by Australian National University, Centre for Climate Economics & Policy in its series Working Papers with number 249420.

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Date of creation: Jan 2014
Handle: RePEc:ags:ancewp:249420
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