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Threshold Policy Effects and Directed Technical Change in Energy Innovation

Author

Listed:
  • Lionel Nesta

    (Université Côte d'Azur
    GREDEG CNRS
    OFCE Sciences Po. Paris
    SKEMA Business School)

  • Elena Verdolini

    (Fondazione ENI Enrico Mattei (FEEM))

  • Francesco Vona

    (OFCE Sciences Po. Paris
    SKEMA Business School)

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

  • Lionel Nesta & Elena Verdolini & Francesco Vona, 2018. "Threshold Policy Effects and Directed Technical Change in Energy Innovation," GREDEG Working Papers 2018-01, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  • Handle: RePEc:gre:wpaper:2018-01
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    References listed on IDEAS

    as
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    Cited by:

    1. Maria Savona & Tommaso Ciarli, 2019. "Structural Changes and Sustainability. A Selected Review of the Empirical Evidence," SPRU Working Paper Series 2019-04, SPRU - Science Policy Research Unit, University of Sussex Business School.

    More about this item

    Keywords

    Directed technical change; threshold models; environmental policies; policy mix;

    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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