IDEAS home Printed from https://ideas.repec.org/a/zbw/jumsac/290636.html
   My bibliography  Save this article

The Effect of Carbon Taxes on Directed Technological Innovation: A Case Study of Sweden

Author

Listed:
  • Oppelt, Paolo

Abstract

A carbon tax is widely seen as an effective climate policy instrument for discouraging the emission of greenhouse gases that cause climate change. According to the economic theory of the Porter hypothesis, a carbon tax can induce directed technological change toward innovation in clean technologies. Nevertheless, empirical research on the effects of a carbon tax on clean innovation, especially concerning recent periods, is sparse. This paper uses a quasi-experimental approach, in the form of the synthetic control method, to estimate the effect of carbon taxes on climate change mitigating technologies. I conduct a case study of the introduction of the carbon tax in 1990/1991 in Sweden and its effect on clean technology in the transportation sector. Sweden is chosen as it was the first country, next to Finland, to implement a carbon tax, and that at a significant price. I find that the introduction of the carbon tax in 1990/1991 has a positive effect with an economically meaningful magnitude on driving innovation in climate change mitigating technologies. The significant and strong effect of the carbon tax on clean innovation can provide important policy insights for other governments, which did not yet introduce a carbon tax or did not do so at an insignificant rate.

Suggested Citation

  • Oppelt, Paolo, 2024. "The Effect of Carbon Taxes on Directed Technological Innovation: A Case Study of Sweden," Junior Management Science (JUMS), Junior Management Science e. V., vol. 9(1), pages 1286-1305.
    • Handle: RePEc:zbw:jumsac:290636
    DOI: 10.5282/jums/v9i1pp1286-1305
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/290636/1/188446565X.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.5282/jums/v9i1pp1286-1305?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. David Card, 1990. "The Impact of the Mariel Boatlift on the Miami Labor Market," ILR Review, Cornell University, ILR School, vol. 43(2), pages 245-257, January.
    2. Dietmar Harhoff & Francis Narin & F. M. Scherer & Katrin Vopel, 1999. "Citation Frequency And The Value Of Patented Inventions," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 511-515, August.
    3. Harhoff, Dietmar & Scherer, Frederic M. & Vopel, Katrin, 2003. "Citations, family size, opposition and the value of patent rights," Research Policy, Elsevier, vol. 32(8), pages 1343-1363, September.
    4. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    5. Joseph M. Crabb & Daniel K.N. Johnson, 2010. "Fueling Innovation: The Impact of Oil Prices and CAFE Standards on Energy-Efficient Automotive Technology," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 199-216.
    6. Fischer, Carolyn & Parry, Ian W. H. & Pizer, William A., 2003. "Instrument choice for environmental protection when technological innovation is endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 523-545, May.
    7. Steffen Brunner & Christian Flachsland & Robert Marschinski, 2012. "Credible commitment in carbon policy," Climate Policy, Taylor & Francis Journals, vol. 12(2), pages 255-271, March.
    8. Alberto Abadie, 2021. "Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 391-425, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brehm, Johannes & aus dem Moore, Nils & Gruhl, Henri, 2022. "Driving Innovation? – Carbon Tax Effects in the Swedish Transport Sector," VfS Annual Conference 2022 (Basel): Big Data in Economics 264085, Verein für Socialpolitik / German Economic Association.
    2. Tomasz Serwach, 2023. "The European Union and within‐country income inequalities. The case of the new member states," The World Economy, Wiley Blackwell, vol. 46(7), pages 1890-1939, July.
    3. Tomasz Serwach, 2022. "The European Union and within-country income inequalities. The case of the New Member States," Working Papers hal-03548416, HAL.
    4. Raphael Calel & Antoine Dechezleprêtre, 2016. "Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 173-191, March.
    5. Nils Verheuvel & Joost Witteman & Marilou Vlaanderen, 2023. "Synthetic Control Method for Dutch Policy Evaluation," De Economist, Springer, vol. 171(1), pages 51-83, March.
    6. Fink, Johanna, 2024. "Do separate bidding zones within countries create imbalances in PV uptake? Evidence from Sweden," Applied Energy, Elsevier, vol. 374(C).
    7. Maria Petrillo & Daniel Valdenegro & Charles Rahal & Yanan Zhang & Gwilym Pryce & Matthew R. Bennett, 2024. "Estimating the Cost of Informal Care with a Novel Two-Stage Approach to Individual Synthetic Control," Papers 2411.10314, arXiv.org, revised Nov 2024.
    8. Billy, Alexander & Packard, Michael, 2022. "Crime and the Mariel Boatlift," International Review of Law and Economics, Elsevier, vol. 72(C).
    9. Johanna Fink, 2023. "Can the creation of separate bidding zones within countries create imbalances in PV uptake? Evidence from Sweden," Papers 2312.16161, arXiv.org.
    10. Teixeira, André, 2023. "Does macroprudential policy affect wealth inequality? Evidence from synthetic controls," Journal of Financial Stability, Elsevier, vol. 67(C).
    11. Echevarría, Cruz A. & Hasancebi, Serhat & García-Enríquez, Javier, 2022. "Economic Effects of Macao’s Integration with Mainland China: A Causal Inference Study," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 179-215.
    12. Nicolaj N. Mühlbach, 2020. "Tree-based Synthetic Control Methods: Consequences of moving the US Embassy," CREATES Research Papers 2020-04, Department of Economics and Business Economics, Aarhus University.
    13. Guan-Can Yang & Gang Li & Chun-Ya Li & Yun-Hua Zhao & Jing Zhang & Tong Liu & Dar-Zen Chen & Mu-Hsuan Huang, 2015. "Using the comprehensive patent citation network (CPC) to evaluate patent value," Scientometrics, Springer;Akadémiai Kiadó, vol. 105(3), pages 1319-1346, December.
    14. Mustapha Douch & Terence Huw Edwards, 2022. "The bilateral trade effects of announcement shocks: Brexit as a natural field experiment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(2), pages 305-329, March.
    15. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    16. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    17. Chuku Chuku & Mustafa Yasin Yenice, 2021. "Working Paper 356 - Eurobonds, debt sustainability and macroeconomic performance in Africa: Synthetic controlled experiments," Working Paper Series 2482, African Development Bank.
    18. Albert N. Link & John T. Scott, 2018. "Propensity to Patent and Firm Size for Small R&D-Intensive Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(4), pages 561-587, June.
    19. Sadeghi, Ali & Kibler, Ewald, 2022. "Do bankruptcy laws matter for entrepreneurship? A Synthetic Control Method analysis of a bankruptcy reform in Finland," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    20. Dennis Shen & Peng Ding & Jasjeet Sekhon & Bin Yu, 2022. "Same Root Different Leaves: Time Series and Cross-Sectional Methods in Panel Data," Papers 2207.14481, arXiv.org, revised Oct 2022.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:jumsac:290636. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://jums.academy/en/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.