Market competition and the adoption of clean technology: Evidence from the taxi industry

Raúl Bajo-Buenestado and Miguel Ángel Borrella-Mas

European Economic Review, 2025, vol. 174, issue C

Abstract: Environmental policies may be ineffective when firms lack incentives to adopt cleaner technologies due to their market power. This paper examines whether a competition shock in a concentrated industry can stimulate the adoption of policy-favored cleaner technologies. Using a unique panel dataset covering the universe of vehicles purchased by taxi drivers in Spain, we exploit the entry of ride-hailing platforms as a natural experiment to identify the impact on their vehicle choices. We find that increased competition led to a 30% surge in the adoption of electric-powered vehicles among taxi drivers. Back-of-the-envelope calculations suggest an overall reduction in CO2 emissions, highlighting the potential of competition policy to promote environmental sustainability while mitigating market power.

Keywords: Green technology adoption; Environmental externalities; Market competition; Environmental policy; Urban transportation (search for similar items in EconPapers)
JEL-codes: L91 O33 Q50 Q58 R41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:174:y:2025:i:c:s0014292125000170

DOI: 10.1016/j.euroecorev.2025.104967

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