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Carbon taxes, path dependency and directed technical change: evidence from the auto industry

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Title: Carbon taxes, path dependency and directed technical change: evidence from the auto industry
Authors: Aghion, P
Dechezleprêtre, A
Hemous, D
Martin, R
Van Reenen, J
Item Type: Journal Article
Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g., electric, hybrid, and hydrogen) patents across 80 countries over several decades. We show that firms tend to innovate more in clean (and less in dirty) technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation (clean/dirty) both from aggregate spillovers and from the firm’s own innovation history. We simulate the increases in carbon taxes needed to allow clean technologies to overtake dirty technologies.
Issue Date: Feb-2016
Date of Acceptance: 1-Jan-2016
URI: http://hdl.handle.net/10044/1/10282
DOI: 10.1086/684581
10.25561/10282
ISSN: 0022-3808
Publisher: University of Chicago Press
Start Page: 1
End Page: 51
Journal / Book Title: Journal of Political Economy
Volume: 124
Issue: 1
Copyright Statement: © 2016 by The University of Chicago. All rights reserved.
Sponsor/Funder: Commission of the European Communities
Funder's Grant Number: 290597
Keywords: Social Sciences
Economics
Business & Economics
TECHNOLOGICAL-CHANGE
COUNT DATA
KNOWLEDGE SPILLOVERS
INDUCED INNOVATION
ECONOMICS
PRICES
MODELS
IMPACT
CITATIONS
DYNAMICS
Economics
14 Economics
15 Commerce, Management, Tourism and Services
Publication Status: Published
Online Publication Date: 2016-01-05
Appears in Collections:Faculty of Natural Sciences
Imperial College Business School
Grantham Institute for Climate Change