IDEAS home Printed from https://ideas.repec.org/p/fem/femwpa/2026.05.html

Induced Innovation in Critical Mineral Saving Technologies

Author

Listed:
  • Andrea Bastianin

    (Department of Economics, Management, and Quantitative Methods, University of Milan and Fondazione Eni Enrico Mattei)

  • Paolo Castelnovo

    (Department of Economics, University of Insubria and Fondazione Eni Enrico Mattei)

  • Federico Fabio Frattini

    (Fondazione Eni Enrico Mattei)

  • Francesco Vona

    (Department of Environmental Science and Policy, University of Milan and Fondazione Eni Enrico Mattei)

Abstract

This paper develops a novel text-based approach to identify CRM-saving innovation using patent data and studies how mineral price signals shape the direction of technological change. Using patent data from 1978–2020, we distinguish technologies that rely on CRMs from those that explicitly aim to reduce their use through efficiency improvements, substitution, or recycling. We provide evidence consistent with the induced-innovation hypothesis: higher mineral prices reallocate inventive effort toward CRM-saving technologies, while having little effect on CRM-reliant innovation. The response strengthens over time and is especially pronounced for battery minerals and rare earth elements. These findings are robust to alternative specifications and are reinforced by complementary identification strategies, including a falsification test and the use of plausibly exogenous supply-side price variation.

Suggested Citation

  • Andrea Bastianin & Paolo Castelnovo & Federico Fabio Frattini & Francesco Vona, 2026. "Induced Innovation in Critical Mineral Saving Technologies," Working Papers 2026.05, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2026.05
    as

    Download full text from publisher

    File URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2026-05.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Laura Alfaro & Harald Fadinger & Jan S. Schymik & Gede Virananda, 2025. "Trade and Industrial Policy in Supply Chains: Directed Technological Change in Rare Earths," NBER Working Papers 33877, National Bureau of Economic Research, Inc.
    2. Kirill Borusyak & Peter Hull & Xavier Jaravel, 2025. "A Practical Guide to Shift-Share Instruments," Journal of Economic Perspectives, American Economic Association, vol. 39(1), pages 181-204, Winter.
    3. Ha, Jongrim & Kose, M. Ayhan & Ohnsorge, Franziska, 2023. "One-stop source: A global database of inflation," Journal of International Money and Finance, Elsevier, vol. 137(C).
    4. W. Walker Hanlon, 2015. "Necessity Is the Mother of Invention: Input Supplies and Directed Technical Change," Econometrica, Econometric Society, vol. 83, pages 67-100, January.
    5. Parker, Miles, 2024. "A global database for energy consumer price indices," Energy Economics, Elsevier, vol. 136(C).
    6. John Hassler & Per Krusell & Conny Olovsson, 2021. "Directed Technical Change as a Response to Natural Resource Scarcity," Journal of Political Economy, University of Chicago Press, vol. 129(11), pages 3039-3072.
    7. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    8. Li, George Yunxiong & Ascani, Andrea & Iammarino, Simona, 2024. "The material basis of modern technologies. A case study on rare metals," Research Policy, Elsevier, vol. 53(1).
    9. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    10. David Roodman & James G. MacKinnon & Morten Ørregaard Nielsen & Matthew D. Webb, 2019. "Fast and wild: Bootstrap inference in Stata using boottest," Stata Journal, StataCorp LLC, vol. 19(1), pages 4-60, March.
    11. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    12. Simona Delle Chiaie & Laurent Ferrara & Domenico Giannone, 2022. "Common factors of commodity prices," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(3), pages 461-476, April.
    13. Montobbio, Fabio & Staccioli, Jacopo & Virgillito, Maria Enrica & Vivarelli, Marco, 2022. "Robots and the origin of their labour-saving impact," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    14. Lutz Kilian, 2009. "Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market," American Economic Review, American Economic Association, vol. 99(3), pages 1053-1069, June.
    15. Jacobsen, Grant D., 2015. "Do energy prices influence investment in energy efficiency? Evidence from energy star appliances," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 94-106.
    16. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    17. Alquist, Ron & Bhattarai, Saroj & Coibion, Olivier, 2020. "Commodity-price comovement and global economic activity," Journal of Monetary Economics, Elsevier, vol. 112(C), pages 41-56.
    18. Popp, David C., 2001. "The effect of new technology on energy consumption," Resource and Energy Economics, Elsevier, vol. 23(3), pages 215-239, July.
    19. Andreas Diemer & Simona Iammarino & Richard Perkins & Axel Gros, 2025. "Technology, resources and geography in a paradigm shift: the case of critical and conflict materials in ICTs," Regional Studies, Taylor & Francis Journals, vol. 59(1), pages 2077326-207, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bastianin, Andrea & Castelnovo, Paolo & Frattini, Federico Fabio & Vona, Francesco, 2026. "Induced Innovation in Critical Mineral Saving Technologies," FEEM Working Papers 391378, Fondazione Eni Enrico Mattei (FEEM).
    2. Antung Anthony Liu & Hiroaki Yamagami, 2018. "Environmental Policy in the Presence of Induced Technological Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(1), pages 279-299, September.
    3. Li, George Yunxiong & Ascani, Andrea & Iammarino, Simona, 2024. "The material basis of modern technologies. A case study on rare metals," Research Policy, Elsevier, vol. 53(1).
    4. Ahmed, Rashad, 2023. "Global commodity prices and macroeconomic fluctuations in a low interest rate environment," Energy Economics, Elsevier, vol. 127(PB).
    5. Amann, Juergen & Cantore, Nicola & Calí, Massimiliano & Todorov, Valentin & Cheng, Charles Fang Chin, 2021. "Switching it up: The effect of energy price reforms in Oman," World Development, Elsevier, vol. 142(C).
    6. Francesco Nicolli & Francesco Vona & Lionel Nesta, 2012. "Determinants of Renewable Energy Innovation: Environmental Policies vs. Market Regulation," Working Papers 201204, University of Ferrara, Department of Economics.
    7. Zhangsheng Liu & Liuqingqing Yang & Liqin Fan, 2021. "Induced Effect of Environmental Regulation on Green Innovation: Evidence from the Increasing-Block Pricing Scheme," IJERPH, MDPI, vol. 18(5), pages 1-15, March.
    8. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    9. repec:ces:ceswps:_10944 is not listed on IDEAS
    10. Patricia Laurens & Christian Le Bas & Stéphane Lhuillery & Antoine Schoen, 2017. "The determinants of cleaner energy innovations of the world’s largest firms: the impact of firm learning and knowledge capital," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(4), pages 311-333, May.
    11. Jianglong Li & Zhi Li, 2018. "Understanding the role of economic transition in enlarging energy price elasticity," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(2), pages 253-281, April.
    12. Dudda, Tom L. & Klein, Tony & Nguyen, Duc Khuong & Walther, Thomas, 2022. "Common Drivers of Commodity Futures?," QBS Working Paper Series 2022/05, Queen's University Belfast, Queen's Business School.
    13. Matsumoto, Akito & Pescatori, Andrea & Wang, Xueliang, 2023. "Commodity prices and global economic activity," Japan and the World Economy, Elsevier, vol. 66(C).
    14. Rubaszek, Michał, 2021. "Forecasting crude oil prices with DSGE models," International Journal of Forecasting, Elsevier, vol. 37(2), pages 531-546.
    15. Takahiko Kiso, 2019. "Environmental Policy and Induced Technological Change: Evidence from Automobile Fuel Economy Regulations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 785-810, October.
    16. Breckenfelder, Johannes & Maćkowiak, Bartosz & Marqués-Ibáñez, David & Olovsson, Conny & Popov, Alexander & Porcellacchia, Davide & Schepens, Glenn, 2023. "The climate and the economy," Working Paper Series 2793, European Central Bank.
    17. Cameron Hepburn & Jacquelyn Pless & David Popp, 2018. "Policy Brief—Encouraging Innovation that Protects Environmental Systems: Five Policy Proposals," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 154-169.
    18. Singer, Gregor, 2024. "Complementary inputs and industrial development: can lower electricity prices improve energy efficiency?," LSE Research Online Documents on Economics 122365, London School of Economics and Political Science, LSE Library.
    19. Vincent Notte, 2026. "Exchange rate pass-through in Latin America: Does dollarization matter?," LIDAM Discussion Papers IRES 2026007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    20. RENTOCCHINI Francesco & VEZZANI Antonio & MONTRESOR Sandro, 2024. "Walking the Green Line: Government Sponsored R&D and Clean Technologies," JRC Working Papers on Corporate R&D and Innovation 2023-01, Joint Research Centre.
    21. Nesta, Lionel & Vona, Francesco & Nicolli, Francesco, 2014. "Environmental policies, competition and innovation in renewable energy," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 396-411.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fem:femwpa:2026.05. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alberto Prina Cerai The email address of this maintainer does not seem to be valid anymore. Please ask Alberto Prina Cerai to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/feemmit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.