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“Salvation and Profit”: Deconstructing the Clean-Tech Bubble

Author

Listed:
  • Vincent Giorgis

    (ETH Zürich)

  • Tobias Huber

    (ETH Zürich)

  • Didier Sornette

    (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute; Southern University of Science and Technology; Tokyo Institute of Technology)

Abstract

From 2004 to 2008, a bubble formed in clean technologies, such as solar, biofuels, batteries, and other renewable energy sources. In this paper, we analyze this clean-tech bubble through the lens of the Social Bubble Hypothesis, which holds that strong social interactions between enthusiastic supporters weave a network of reinforcing feedbacks that lead to widespread endorsement and extraordinary commitment by those involved. We present a detailed synthesis of the development of the clean-tech bubble, its history, and the role of venture capital and government funding in catalyzing it. In particular, we dissect the underlying narrative that was fueling the bubble. As bubbles can be essential in the process of accelerating the development of emerging technologies and diffusion of technological innovations, we present evidence that the clean-tech bubble constituted an example of an innovation-accelerating process.

Suggested Citation

  • Vincent Giorgis & Tobias Huber & Didier Sornette, 2021. "“Salvation and Profit”: Deconstructing the Clean-Tech Bubble," Swiss Finance Institute Research Paper Series 21-36, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2136
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    More about this item

    Keywords

    Financial Bubbles; Narrative Economics; Technological Innovation; Clean Tech; Energy; Venture Capital;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • G01 - Financial Economics - - General - - - Financial Crises
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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