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Interacting innovation investments and environmental performances: a dynamic impure public good model

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  • Massimiliano Corradini
  • Valeria Costantini
  • Susanna Mancinelli
  • Massimiliano Mazzanti

Abstract

This paper develops a theoretical model to study how investment decisions in innovation taken by a single agent are influenced by environmental externalities produced by investment decisions taken by other agents. The model acts in a dynamic framework, where knowledge stock represents the capital good on which investment decisions over time are taken. Knowledge stock is considered as an impure public good which is responsible for both private and public benefits. We first show that the reaction function between one representative agent’s investments in innovation and the other agents’ investments in the public characteristic of the impure public good has a positive slope under general conditions. We also find that its sensitiveness is affected by the elasticity of substitution in the benefit function as well as by the degree of complementarity between the private and the public characteristics. Copyright Springer Japan 2015

Suggested Citation

  • Massimiliano Corradini & Valeria Costantini & Susanna Mancinelli & Massimiliano Mazzanti, 2015. "Interacting innovation investments and environmental performances: a dynamic impure public good model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(1), pages 109-129, January.
    • Handle: RePEc:spr:envpol:v:17:y:2015:i:1:p:109-129
    DOI: 10.1007/s10018-014-0091-0
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    Cited by:

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    2. Grafström, Jonas, 2021. "Ratio Working Paper No. 351: Knowledge Spillovers in the Solar energy sector," Ratio Working Papers 351, The Ratio Institute.
    3. Grafström, Jonas, 2017. "An Econometric Analysis of Divergence of Renewable Energy Invention Efforts in Europe," Ratio Working Papers 295, The Ratio Institute.
    4. Patricia Laurens & Christian Le Bas & Stéphane Lhuillery & Antoine Schoen, 2017. "The determinants of cleaner energy innovations of the world’s largest firms: the impact of firm learning and knowledge capital," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(4), pages 311-333, May.
    5. Quatraro, Francesco & Scandura, Alessandra, 2019. "Academic Inventors and the Antecedents of Green Technologies. A Regional Analysis of Italian Patent Data," Ecological Economics, Elsevier, vol. 156(C), pages 247-263.
    6. Grafström, Jonas & Söderholm, Patrik & Gawel, Erik & Lehmann, Paul & Strunz, Sebastian, 2017. "Knowledge Accumulation from Public Renewable Energy R&D in the European Union: Converging or Diverging Trends?," Ratio Working Papers 292, The Ratio Institute.
    7. Miremadi, I. & Saboohi, Y. & Arasti, M., 2019. "The influence of public R&D and knowledge spillovers on the development of renewable energy sources: The case of the Nordic countries," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 450-463.
    8. Jonas Grafström, 2018. "Divergence of renewable energy invention efforts in Europe: an econometric analysis based on patent counts," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(4), pages 829-859, October.

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    More about this item

    Keywords

    Impure public good; Environmental externality; Innovation; Dynamic model; Investments; D21; H41; O33; Q53;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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