Working Paper: CEPR ID: DP9267
Authors: Philippe Aghion; Antoine Dechezleprêtre; David Hemous; Ralf Martin; John Van Reenen
Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over severaldecades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.
Keywords: Automobiles; Climate Change; Directed Technical Change; Innovation
JEL Codes: L62; O13; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher tax-inclusive fuel prices (H29) | firms innovate more in clean technologies (Q55) |
| Higher tax-inclusive fuel prices (H29) | firms innovate less in dirty technologies (Q55) |
| Firms' past exposure to clean technologies (Q52) | propensity to innovate in clean technologies (Q55) |
| Firms' past engagement with dirty technologies (Q52) | propensity to innovate in clean technologies (Q55) |
| Firms located in areas with a rich history of clean innovation (O31) | likelihood of innovating in clean technologies (Q55) |