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Competing Recombinant Technologies for Environmental Innovation

Author

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  • Paolo Zeppini

    (University of Amsterdam)

  • Jeroen C.J.M. van den Bergh

    (Autonomous University of Barcelona, and VU University Amsterdam)

Abstract

This discussion paper resulted in a publication in 'Industry and Innovation', 2011, 18(3), 317-334. This article presents a model of sequential decisions about investments in environmentally dirty and clean technologies, which extends the path-dependence framework of Arthur (1989). This allows us to evaluate if and how an economy locked into a dirty technology can be unlocked and move towards the clean technology. The main extension involves the inclusion of the effect of recombinant innovation of the two technologies. A mechanism of endogenous competition is described involving a positive externality of increasing returns to investment which are counterbalanced by recombinant innovation. We determine conditions under which lock-in can be avoided or escaped. A second extension is "symmetry breaking" of the the system due to the introduction of an environmental policy that charges a price for polluting. A final extension adds a cost of environmental policy in the form of lower returns on investment implemented through a growth-depressing factor. We compare cumulative pollution under different scenarios, so that we can evaluate the combination of environmental regulation and recombinant innovation.

Suggested Citation

  • Paolo Zeppini & Jeroen C.J.M. van den Bergh, 2010. "Competing Recombinant Technologies for Environmental Innovation," Tinbergen Institute Discussion Papers 10-107/1, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20100107
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    File URL: http://papers.tinbergen.nl/10107.pdf
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    References listed on IDEAS

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    1. Zeppini, Paolo & van den Bergh, Jeroen C.J.M., 2013. "Optimal diversity in investments with recombinant innovation," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 141-156.
    2. Dasgupta, Partha & Maskin, Eric, 1987. "The Simple Economics of Research Portfolios," Economic Journal, Royal Economic Society, vol. 97(387), pages 581-595, September.
    3. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    4. Jaber, J. O. & Odeh, S. D. & Probert, S. D., 2003. "Integrated PV and gas-turbine system for satisfying peak-demands," Applied Energy, Elsevier, vol. 76(4), pages 305-319, December.
    5. van den Bergh, Jeroen C.J.M., 2008. "Optimal diversity: Increasing returns versus recombinant innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 565-580, December.
    6. Brian Arthur, W. & Ermoliev, Yu. M. & Kaniovski, Yu. M., 1987. "Path-dependent processes and the emergence of macro-structure," European Journal of Operational Research, Elsevier, vol. 30(3), pages 294-303, June.
    7. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    8. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
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    Citations

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    Cited by:

    1. Zeppini, Paolo, 2015. "A discrete choice model of transitions to sustainable technologies," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 187-203.
    2. Paolo Zeppini & Koen Frenken & Roland Kupers, 2013. "Threshold models of technological transitions," Working Papers 13-06, Eindhoven Center for Innovation Studies, revised Aug 2013.
    3. Timothy J. Foxon & Jonathan Köhler & Jonathan Michie & Christine Oughton, 2013. "Towards a new complexity economics for sustainability," Cambridge Journal of Economics, Oxford University Press, vol. 37(1), pages 187-208.
    4. Giulio Cainelli & Massimiliano Mazzanti & Simone Borghesi, 2012. "The European Emission Trading Scheme and environmental innovation diffusion: Empirical analyses using Italian CIS data," Working Papers 201201, University of Ferrara, Department of Economics.
    5. Giulio Cainelli & Massimiliano Mazzanti & Roberto Zoboli, 2011. "Enviromental Innovations, Complementarity and Local/Global Cooperation," Working Papers 201104, University of Ferrara, Department of Economics.

    More about this item

    Keywords

    externalities; hybrid technology; lock-in; R&D; sequential decisions;

    JEL classification:

    • 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

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