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

Alberto Agnelli, Hélia Costa and Damien Dussaux

No 209, OECD Environment Working Papers from OECD Publishing

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.

Keywords: firm performance; fuel prices; fuel taxation; green technology; price salience; technological change (search for similar items in EconPapers)
JEL-codes: O30 Q48 Q55 (search for similar items in EconPapers)
Date: 2023-02-22
New Economics Papers: this item is included in nep-ene, nep-env, nep-ino, nep-res, nep-tid and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:oec:envaaa:209-en

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