Competing Recombinant Technologies for Environmental Innovation

Arbeitspapier

This article presents a model of sequential decisions about investments in environmentally dirty and clean technologies, which extends the path-dependence framework of Arthur (1989). This allows us to evaluate if and how an economy locked into a dirty technology can be unlocked and move towards the clean technology. The main extension involves the inclusion of the effect of recombinant innovation of the two technologies. A mechanism of endogenous competition is described involving a positive externality of increasing returns to investment which are counterbalanced by recombinant innovation. We determine conditions under which lock-in can be avoided or escaped. A second extension is symmetry breaking of the the system due to the introduction of an environmental policy that charges a price for polluting. A final extension adds a cost of environmental policy in the form of lower returns on investment implemented through a growth-depressing factor. We compare cumulative pollution under different scenarios, so that we can evaluate the combination of environmental regulation and recombinant innovation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 10-107/1

Classification and Topics

• Classification: Wirtschaft ; Technological Change: Choices and Consequences; Diffusion Processes ; Environmental Economics: Technological Innovation
• Subject: externalities ; hybrid technology ; lock-in ; R&D ; sequential decisions ; Externer Effekt ; Technologiewahl ; Pfadabhängigkeit ; Technischer Fortschritt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Zeppini, Paolo ; van den Bergh, Jeroen C.J.M.
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/86892
• Last update: 10.03.2025, 11:42 AM CET