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The economic benefits of early green innovation: Evidence from the automotive sector

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  • Alberto Agnelli
  • Hélia Costa
  • Damien Dussaux

Abstract

The economic consequences for firms investing in green innovation, and therefore their incentives to innovate, are not well understood. This paper empirically assesses the economic returns on innovation in cleaner vehicles. The analysis uses data on passenger car market shares and patents for car manufacturers operating in eight countries for the period 2005-2021. The results show that, when vehicle fuel prices increase, firms having previously successfully filed patents related to both electric and hybrid vehicles and fuel efficiency experience an increase in their market share. This increase takes place between 7 and 8 years after the patent stock is accumulated for patents related to electric and hybrid vehicles and between 8 and 15 years for patents related to fuel efficiency. The analysis also finds that in contexts where fuel price salience is high, price increases generate larger and earlier competitiveness returns for firms having previously invested in cleaner technologies.

Suggested Citation

  • Alberto Agnelli & Hélia Costa & Damien Dussaux, 2023. "The economic benefits of early green innovation: Evidence from the automotive sector," OECD Environment Working Papers 209, OECD Publishing.
  • Handle: RePEc:oec:envaaa:209-en
    DOI: 10.1787/c13d5d61-en
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    More about this item

    Keywords

    firm performance; fuel prices; fuel taxation; green technology; price salience; technological change;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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