Threshold Policy Effects and Directed Technical Change in Energy Innovation

Lionel Nesta, Elena Verdolini and Francesco Vona

No 2018-01, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: This paper analyzes the effect of environmental policies on the direction of energy innovation across countries over the period 1990-2012. Our novelty is to use threshold regression models to allow for discontinuities in policy effectiveness depending on a country's relative competencies in renewable and fossil fuel technologies. We show that the dynamic incentives of environmental policies become effective just above the median level of relative competencies. In this critical second regime, market-based policies are moderately effective in promoting renewable innovation, while command-and-control policies depress fossil based innovation. Finally, market-based policies are more effective to consolidate a green comparative advantage in the last regime. We illustrate how our approach can be used for policy design in laggard countries.

Keywords: Directed technical change; threshold models; environmental policies; policy mix (search for similar items in EconPapers)
JEL-codes: O34 Q42 Q48 Q55 Q58 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2018-01
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-ino, nep-reg, nep-res and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Threshold Policy Effects and Directed Technical Change in Energy Innovation (2018)
Working Paper: Threshold Policy Effects and Directed Technical Change in Energy Innovation (2018)
Working Paper: Threshold Policy Effects and Directed Technical Change in Energy Innovation (2018)
Working Paper: Threshold policy effects and directed technical change in Energy Innovation (2018)
Working Paper: Threshold Policy Effects and Directed Technical Change in Energy Innovation (2018)
Working Paper: Threshold policy effects and directed technical change in Energy Innovation (2018)
Working Paper: Threshold Policy Effects and Directed Technical Change in Energy Innovation (2018)
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