Implications for enterprise to adopt cleaner technology: From the perspective of energy market and commodity market

Jian-Xin Guo and Kaiwei Zhu

Research in International Business and Finance, 2021, vol. 57, issue C

Abstract: Business-related decision making seems more difficulty than ever before. Diffusion signals from different market make it difficult for policy makers to adopt clear strategy, and the lack of clear coping strategies will hinder stakeholders in the market from making strong investment decisions as early as possible. To cope with this problem, we propose an innovative model that can analyze production decisions and technology adoption of enterprises been faced with two coupled markets. With the help of this quantitative method, we answer the basic question of the investment path and technology adoption time in a class of enterprises, and further analyze which factors in the related markets have a more obvious impact on the decision. A novel feature of this work is that we characterize the connection mechanism of the two markets so that we can investigate the interaction between enterprises’ decisions and the markets’ signals. Our stochastic model allows for quite general dependence on energy fuel price and investment choice. Turning to the special Monte-Carlo based method, we can determine the optimal time to invest as well as the switching time. We applied this framework to an empirical case of heating technology on a highway, and found that both consumer preferences and energy prices have a significant impact on enterprise's investment strategy, but consumer preferences have a greater impact on the transition time for cleaner technologies. Also, the results have potentially important policy implications and can provide a rationale for supporting cleaner technologies.

Keywords: Coupled-market; Cleaner technology; Energy price; Consumer preference (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:57:y:2021:i:c:s0275531921000209

DOI: 10.1016/j.ribaf.2021.101399

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