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Network effects and environmental externalities: Do clean technologies suffer from excess inertia?

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  • Greaker, Mads
  • Midttømme, Kristoffer

Abstract

We study the diffusion of a clean substitute to a dirty durable in a dynamic model. Consumer utility of both durables increases in their respective market shares due to network effects.

Suggested Citation

  • Greaker, Mads & Midttømme, Kristoffer, 2016. "Network effects and environmental externalities: Do clean technologies suffer from excess inertia?," Journal of Public Economics, Elsevier, vol. 143(C), pages 27-38.
    • Handle: RePEc:eee:pubeco:v:143:y:2016:i:c:p:27-38
    DOI: 10.1016/j.jpubeco.2016.08.004
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    Cited by:

    1. Philippe Aghion & Lint Barrage & David Hemous & Ernest Liu, 2024. "Transition to green technology along the supply chain," CEP Discussion Papers dp2017, Centre for Economic Performance, LSE.
    2. Giulia Ceccantoni & Ornella Tarola & Cecilia Vergari, 2023. "Tax and pollution in a vertically differentiated duopoly: When consumers matter," Metroeconomica, Wiley Blackwell, vol. 74(2), pages 416-445, May.
    3. Greaker, Mads & Hagem, Cathrine & Proost, Stef, 2022. "An economic model of vehicle-to-grid: Impacts on the electricity market and consumer cost of electric vehicles," Resource and Energy Economics, Elsevier, vol. 69(C).
    4. Stef Proost & Mads Greaker & Cathrine Hagem, 2019. "Vehicle-to-Grid. Impacts on the electricity market and consumer cost of electric vehicles," Discussion Papers 903, Statistics Norway, Research Department.
    5. Brita Bye & Kevin R. Kaushal & Orvika Rosnes & Karen Turner & Hidemichi Yonezawa, 2023. "The Road to a Low Emission Society: Costs of Interacting Climate Regulations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 565-603, November.
    6. Littlejohn, Christina & Proost, Stef, 2022. "What role for electric vehicles in the decarbonization of the car transport sector in Europe?," Economics of Transportation, Elsevier, vol. 32(C).
    7. Timothy Besley & Torsten Persson, 2019. "JEEA-FBBVA LECTURE 2017: The Dynamics of Environmental Politics and Values," Journal of the European Economic Association, European Economic Association, vol. 17(4), pages 993-1024.
    8. Vollebergh, Herman & van der Werf, Edwin & Vogel, Johanna, 2023. "A descriptive framework to evaluate instrument packages for the low-carbon transition," Ecological Economics, Elsevier, vol. 205(C).
    9. Adriana Gama & Rim Lahmandi-Ayed & Ana Elisa Pereira, 2020. "Entry and mergers in oligopoly with firm-specific network effects," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(4), pages 1139-1164, November.
    10. G. Ceccantoni & O. Tarola & C. Vergari, 2017. "Relative tax in a vertically differentiated market: the key role of consumers in environment," Working Papers wp2005, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Rabah Amir & Igor Evstigneev & Adriana Gama, 2021. "Oligopoly with network effects: firm-specific versus single network," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(3), pages 1203-1230, April.
    12. Hans Gersbach & Marie-Catherine Riekhof, 2022. "Technology Treaties And Climate Change," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 1-42, May.
    13. Meunier, Guy & Ponssard, Jean-Pierre, 2020. "Optimal policy and network effects for the deployment of zero emission vehicles," European Economic Review, Elsevier, vol. 126(C).
    14. Andreassen, Gøril L. & Rosendahl, Knut Einar, 2022. "One or two non-fossil technologies in the decarbonized transport sector?," Resource and Energy Economics, Elsevier, vol. 69(C).
    15. Wu, Di & Sun, Ji & Wang, Leonard F.S. & Liu, Huizhong, 2024. "Network externalities in a vertically differentiated luxury goods market," Mathematical Social Sciences, Elsevier, vol. 128(C), pages 100-109.
    16. Nawab Khan & Ram L. Ray & Hazem S. Kassem & Sajjad Hussain & Shemei Zhang & Muhammad Khayyam & Muhammad Ihtisham & Simplice A. Asongu, 2021. "Potential Role of Technology Innovation in Transformation of Sustainable Food Systems: A Review," Agriculture, MDPI, vol. 11(10), pages 1-20, October.
    17. Enda Patrick Hargaden & Andrew Hanson & Matthew Harris, 2023. "The Optimal Taxation of Network Goods," Working Papers 2023-01, University of Tennessee, Department of Economics.
    18. Åsa Löfgren & Lassi Ahlvik & Inge den Bijgaart & Jessica Coria & Jūratė Jaraitė & Filip Johnsson & Johan Rootzén, 2024. "Green industrial policy for climate action in the basic materials industry," Climatic Change, Springer, vol. 177(9), pages 1-12, September.
    19. Jeremy Dijk & Nathan Delacrétaz & Bruno Lanz, 2022. "Technology Adoption and Early Network Infrastructure Provision in the Market for Electric Vehicles," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(3), pages 631-679, November.
    20. Nathan Delacrétaz & Bruno Lanz & Jeremy van Dijk, 2020. "The chicken or the egg: Technology adoption and network infrastructure in the market for electric vehicles," IRENE Working Papers 20-08, IRENE Institute of Economic Research.
    21. Jin, Wei, 2021. "Path dependence, self-fulfilling expectations, and carbon lock-in," Resource and Energy Economics, Elsevier, vol. 66(C).
    22. Ornella Tarola & Cecilia Vergari, 2024. "Endogenous subsidies for cleaner products: The role of ecofriendly consumers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(2), February.

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    More about this item

    Keywords

    Network effects; Excess inertia; Environmental taxes; Technology lock-in;
    All these keywords.

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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