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Environmental Policies and Directed Technological Change

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  • Gugler, Klaus
  • Szücs, Florian
  • Wiedenhofer, Thomas

Abstract

This article evaluates if and to which extent policy can steer innovation towards eco-friendly technologies. We construct a cross-country dataset on sectoral green innovation and complement it with data on policies designed to address environmental market failures: environmental taxes, regulation, and R&D subsidies. While all of these tools exert a positive effect on green innovation, our IV estimates reveal substantial heterogeneities across policies. Overall, green innovation reacts most strongly to R&D subsidies for renewables, but interaction effects between different policies need to be considered.

Suggested Citation

  • Gugler, Klaus & Szücs, Florian & Wiedenhofer, Thomas, 2023. "Environmental Policies and Directed Technological Change," Department of Economics Working Paper Series 355, WU Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wus005:59343718
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    References listed on IDEAS

    as
    1. Nordhaus, William D, 1969. "An Economic Theory of Technological Change," American Economic Review, American Economic Association, vol. 59(2), pages 18-28, May.
    2. 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.
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    More about this item

    Keywords

    climate change; environmental policies; directed technological change; green patents; regulation; taxes; R&D;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • 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

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