Competing Recombinant Technologies for Environmental Innovation: Extending Arthur's Model of Lock-In

Paolo Zeppini and Jeroen van den Bergh

Industry and Innovation, 2011, vol. 18, issue 3, 317-334

Abstract: This article presents a model of sequential decisions about investments in environmentally dirty and clean technologies, which extends the path-dependence framework of B. Arthur (1989, Competing technologies, increasing returns, and lock-in by historical events, The Economic Journal, 99, pp. 116-131). This allows us to evaluate if and how an economy locked into a dirty technology can be unlocked and move towards clean technology. The main extension involves the inclusion of the effect of recombinant innovation of the two technologies. A mechanism of endogenous competition is described involving a positive externality of increasing returns to investment which are counterbalanced by recombinant innovation. We determine conditions under which lock-in can be avoided or escaped. A second extension is “symmetry breaking” of the system due to the introduction of an environmental policy that charges a price for polluting. A final extension adds a cost of environmental policy in the form of lower returns on investment implemented through a growth-depressing factor. We compare cumulative pollution under different scenarios, so that we can evaluate the combination of environmental regulation and recombinant innovation.

Keywords: Externalities; hybrid technology; lock-in; R&D; sequential decisions (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/13662716.2011.561031 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Competing Recombinant Technologies for Environmental Innovation: Extending Arthur's Model of Lock-In (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:indinn:v:18:y:2011:i:3:p:317-334

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CIAI20

DOI: 10.1080/13662716.2011.561031

Access Statistics for this article

Industry and Innovation is currently edited by Associate Professor Mark Lorenzen

More articles in Industry and Innovation from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().