Should environmental R&D be prioritized?

Rolf Golombek, Mads Greaker and Michael Hoel

Resource and Energy Economics, 2020, vol. 60, issue C

Abstract: An innovator may not be able to capture the full social benefit of her innovation and, therefore, governments support private R&D through various measures. We compare a market good innovation—to develop a more efficient technology to produce a standard market good—with an environmental innovation—to develop a more efficient abatement technology—that has the same potential to increase the social surplus. In the first-best outcome, which can be achieved by offering an R&D subsidy and a diffusion subsidy, the R&D subsidy should be greatest for an environmental innovation, whereas the diffusion subsidy should be greatest for a market good innovation. The ranking of the two types of subsidies reflects that the appropriability problem is greater for an environmental innovation than for a market good innovation.

Keywords: R&D; Environmental R&D; Innovations; Endogenous technological change; Innovation prize; Diffusion subsidy (search for similar items in EconPapers)
JEL-codes: H23 O30 Q55 Q58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:60:y:2020:i:c:s0928765519301861

DOI: 10.1016/j.reseneeco.2019.101132

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