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Threshold Policy Effects and Directed Technical Change in Energy Innovation

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  • Nesta, Lionel
  • Verdolini, Elena
  • Vona, Francesco

Abstract

This paper analyzes the effect of environmental policies on the direction of energy innovation across countries over the period 1990-2012. Our novelty is to use threshold regression models to allow for discontinuities in policy effectiveness depending on a country's relative competencies in renewable and fossil fuel technologies. We show that the dynamic incentives of environmental policies become effective just above the median level of relative competencies. In this critical second regime, market-based policies are moderately effective in promoting renewable innovation, while command-and-control policies depress fossil based innovation. Finally, market-based policies are more effective to consolidate a green comparative advantage in the last regime. We illustrate how our approach can be used for policy design in laggard countries.

Suggested Citation

  • Nesta, Lionel & Verdolini, Elena & Vona, Francesco, 2018. "Threshold Policy Effects and Directed Technical Change in Energy Innovation," CSI: Climate and Sustainable Innovation 268731, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemci:268731
    DOI: 10.22004/ag.econ.268731
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    Cited by:

    1. Nicolli, Francesco & Vona, Francesco, 2019. "Energy market liberalization and renewable energy policies in OECD countries," Energy Policy, Elsevier, vol. 128(C), pages 853-867.
    2. Ming Yi & Xiaomeng Fang & Le Wen & Fengtao Guang & Yao Zhang, 2019. "The Heterogeneous Effects of Different Environmental Policy Instruments on Green Technology Innovation," IJERPH, MDPI, vol. 16(23), pages 1-19, November.
    3. Filippo Bontadini & Francesco Vona, 2023. "Anatomy of Green Specialisation: Evidence from EU Production Data, 1995–2015," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(3), pages 707-740, August.
    4. David Popp & Francesco Vona & Myriam Grégoire-Zawilski & Giovanni Marin, 2024. "The Next Wave of Energy Innovation: Which Technologies? Which Skills?," Review of Environmental Economics and Policy, University of Chicago Press, vol. 18(1), pages 45-65.
    5. Savona, Maria & Ciarli, Tommaso, 2019. "Structural Changes and Sustainability. A Selected Review of the Empirical Evidence," Ecological Economics, Elsevier, vol. 159(C), pages 244-260.
    6. Nicolo Barbieri & Alberto Marzucchi & Ugo Rizzo, 2021. "Green technologies, complementarities, and policy," SPRU Working Paper Series 2021-08, SPRU - Science Policy Research Unit, University of Sussex Business School.
    7. Michela Chessa & Patrick Loiseau, 2018. "Incentivizing Efficiency in Local Public Good Games and Applications to the Quantification of Personal Data in Networks," GREDEG Working Papers 2018-02, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    8. Barbieri, Nicolò & Marzucchi, Alberto & Rizzo, Ugo, 2023. "Green technologies, interdependencies, and policy," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).

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    More about this item

    Keywords

    Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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