Carbon taxes, path dependency and directed technical change: evidence from the auto industry

Philippe Aghion, Antoine Dechezleprêtre, David Hemous, Ralf Martin and John van Reenen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.

Keywords: climate change; innovation; directed technical change; automobiles (search for similar items in EconPapers)
JEL-codes: L62 O13 O3 (search for similar items in EconPapers)
Date: 2016-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (334)

Published in Journal of Political Economy, February, 2016, 124(1), pp. 1-51. ISSN: 0022-3808

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http://eprints.lse.ac.uk/62722/ Open access version. (application/pdf)

Related works:
Journal Article: Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry (2016)
Working Paper: Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry (2016)
Working Paper: Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry (2016)
Working Paper: Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry (2016)
Working Paper: Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry (2012)
Working Paper: Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry (2012)
Working Paper: Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry (2012)
Working Paper: Carbon taxes, path dependency and directed technical change: evidence from the auto industry (2012)
Working Paper: Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry (2012)
Working Paper: Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry (2012)
Working Paper: Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry (2012)
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