Fueling Innovation: The Impact of Oil Prices and CAFE Standards on Energy-Efficient Automotive Technology

Joseph M. Crabb and Daniel K.N. Johnson

The Energy Journal, 2010, vol. Volume 31, issue Number 1, 199-216

Abstract: This paper tests the induced innovation hypothesis that higher oil prices will lead to increased innovation in energy-efficient automotive technology. Using a dynamic model of patenting, we find robust empirical support for the hypothesis, concluding that both the acquisition cost and retail markup portion of fuel prices are powerful in generating subsequent innovation. Our results include the effects of CAFE regulations, finding no evidence of their impact on innovation, even within a model that endogenizes them via fuel price expectations.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (58)

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