Financing the Adoption of Clean Technology

Andrea Lanteri and Adriano A. Rampini

No 20025, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyze the adoption of clean technology by heterogeneous firms subject to financing constraints. In the model, capital goods differ in terms of their energy needs and age. In equilibrium, cleaner and newer capital requires more financial resources. Therefore, financial constraints induce an endogenous pattern in clean technology adoption: Financially constrained, smaller firms optimally invest in dirtier and older capital than unconstrained, larger firms. The model is consistent with the empirical patterns of technology adoption we document using data on commercial shipping fleets. We use a calibrated version of our model to simulate the aggregate transition dynamics to cleaner technology.

Date: 2025-03
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