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Environmental policies and eco-innovations by service firms: An agent-based model

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  • Desmarchelier, Benoît
  • Djellal, Faridah
  • Gallouj, Faïz

Abstract

Contrary to a widely held prejudice, service activities are polluting because they make use of physical tools and require travel, both of which give rise to externalities. In order to deal with these externalities, service firms can implement eco-innovations. The aim of this article is to evaluate the sensitivity of this eco-innovation to environmental policies by comparing the effectiveness of two such policies: the environmental tax and consumer information. To this end, we construct an agent-based model of innovation that draws on evolutionary biology and theories of innovation in services (Gallouj and Weinstein, 1997 [26]). A test of 123 different scenarios confirms that service firms are sensitive to environmental policies. The results suggest that the eco-tax is more effective, since it produces a lower and more stable level of pollution than a consumer information policy. The information policy appears to give rise to a perverse effect that causes market niches for the most environmentally friendly services to disappear.

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  • Desmarchelier, Benoît & Djellal, Faridah & Gallouj, Faïz, 2013. "Environmental policies and eco-innovations by service firms: An agent-based model," Technological Forecasting and Social Change, Elsevier, vol. 80(7), pages 1395-1408.
    • Handle: RePEc:eee:tefoso:v:80:y:2013:i:7:p:1395-1408
    DOI: 10.1016/j.techfore.2012.11.005
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    7. J. Farmer & Cameron Hepburn & Penny Mealy & Alexander Teytelboym, 2015. "A Third Wave in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 329-357, October.
    8. Cainelli, Giulio & Mazzanti, Massimiliano, 2013. "Environmental innovations in services: Manufacturing–services integration and policy transmissions," Research Policy, Elsevier, vol. 42(9), pages 1595-1604.
    9. Patricia Jissette Rodríguez Sánchez & Mariana Hernández González & Gabriel Andrés Plazas Guerrero, 2018. "Sustainability Policy For Manufacturing Sector. Case Of Two Developing Countries," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 12(1), pages 239-249.
    10. Savona, Maria & Ciarli, Tommaso, 2019. "Structural Changes and Sustainability. A Selected Review of the Empirical Evidence," Ecological Economics, Elsevier, vol. 159(C), pages 244-260.
    11. Jing Wu & Rayman Mohamed & Zheng Wang, 2017. "An Agent-Based Model to Project China’s Energy Consumption and Carbon Emission Peaks at Multiple Levels," Sustainability, MDPI, vol. 9(6), pages 1-19, May.
    12. Machado Léo, Ricardo & Tello‐Gamarra, Jorge, 2016. "Inovac¸ão em servic¸os: estado da arte e perspectivas futuras [Innovation in services: state of the art and future perspectives]," MPRA Paper 82195, University Library of Munich, Germany, revised 29 Mar 2017.
    13. Rizzati, Massimiliano & Landoni, Matteo, 2024. "A systematic review of agent-based modelling in the circular economy: Insights towards a general model," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 617-631.
    14. Jana Hojnik, 2017. "In Pursuit of Eco-innovation," UPP Monograph Series, University of Primorska Press, number 978-961-7023-53-4.
    15. Matthijs J. Janssen & Koen Frenken & Elena M. Tur & Alexander S. Alexiev, 2022. "The perils of pleasing: Innovation-stifling effects of customized service provision," Journal of Evolutionary Economics, Springer, vol. 32(4), pages 1231-1264, September.
    16. Birchenhall Chris & Windrum Paul, 2014. "Global Warming: Technology, Preferences and Policy," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 366-387, April.
    17. Desmarchelier, Benoît & Fang, Eddy S., 2016. "National culture and innovation diffusion. Exploratory insights from agent-based modeling," Technological Forecasting and Social Change, Elsevier, vol. 105(C), pages 121-128.

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