Environmental preferences and technological choices: is market competition clean or dirty?
Philippe Aghion,
Roland Benabou,
Ralf Martin and
Alexandra Roulet
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
Abstract:
This paper investigates the joint effect of consumers' environmental concerns and product-market competition on firms’ decisions whether to innovate “clean” or “dirty”. We first develop a step-bystep innovation model to capture the basic intuition that socially responsible consumers induce firms to escape competition by pursuing greener innovations. To test and quantify the theory, we bring together patent data, survey data on environmental values, and competition measures. Using a panel of 8,562 firms from the automobile sector that patented in 42 countries between 1998 and 2012, we indeed find that greater exposure to environmental attitudes has a significant positive effect on the probability for a firm to innovate in the clean direction, and all the more so the higher the degree of product market competition. Results suggest that the combination of historically realistic increases in prosocial attitudes and product market competition can have the same effect on green innovation as major increase in fuel prices.
Keywords: environment; product market competition; innovation (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-ino and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)
Downloads: (external link)
http://eprints.lse.ac.uk/108425/ Open access version. (application/pdf)
Related works:
Journal Article: Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty? (2023) 
Working Paper: Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty? (2023)
Working Paper: Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty? (2023)
Working Paper: Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty? (2021) 
Working Paper: Environmental preferences and technological choices: is market competition clean or dirty? (2020) 
Working Paper: Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty? (2020) 
Working Paper: Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty? (2020) 
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:108425
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