Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry
Open accessAbstract
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, hybrid, and hydrogen) patents across 80 countries over several decades. We show that firms tend to innovate more in clean (and less in dirty) technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation (clean/dirty) both from aggregate spillovers and from the firm’s own innovation history. We simulate the increases in carbon taxes needed to allow clean technologies to overtake dirty technologies.
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Increased energy price, carbon tax, and the EU ETS can facilitate low-carbon innovation.
“The empirical literature confirms that increased energy price20, carbon tax21, and the EU ETS22 can facilitate low-carbon innovation.”
From Low-carbon innovation induced by emissions trading in China (2019) · cites this paper as [21]
Cites
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“In particular, see Stern ð2006Þ, Nordhaus ð2007Þ, Weitzman ð2007, 2009Þ, Dasgupta ð2008Þ, Mendelsohn et al. ð2008Þ, von Below and Persson ð2008Þ, and Yohe, Tol, and Anthoff ð2009Þ.”
A Review of the <i>Stern Review on the Economics of Climate Change</i>
Weitzman, M. L. (2007) · Journal of Economic Literature · doi:10.1257/jel.45.3.703 · Cited by 1,024 · see citing works
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Bataille, C., Åhman, M., Neuhoff, K., Nilsson, L. J., Fischedick, M., Lechtenböhmer, S., Solano-Rodriquez, B., Denis-Ryan, A., Stiebert, S., Waisman, H., et al. (2018) · Journal of Cleaner Production · doi:10.1016/j.jclepro.2018.03.107 · Cited by 680 · see citing works
Low-carbon innovation induced by emissions trading in China
Zhu, J., Fan, Y., Deng, X., & Xue, L. (2019) · Nature Communications · doi:10.1038/s41467-019-12213-6 · Cited by 467 · see citing works
Does the EU ETS cause carbon leakage in European manufacturing?
Naegele, H., & Zaklan, A. (2019) · Journal of Environmental Economics and Management · doi:10.1016/j.jeem.2018.11.004 · Cited by 312 · see citing works
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Self-citationReal Effects of Climate Policy: Financial Constraints and Spillovers
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The paradox of value, directed technical change, and the relative abundance of the chemical elements
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Technological Progress and Climate Change: Evidence from the Agricultural Sector
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- Authors
- Aghion, P., Dechezleprêtre, A., Hémous, D., Martin, R., & Van Reenen, J.
- Affiliations
- Canadian Institute for Advanced Research (CA)
- London School of Economics and Political Science (GB)
- INSEAD (FR)
- Imperial College London (GB)
- Venue
- Journal of Political Economy
- Publisher
- University of Chicago Press
- Published
- 2016-02
- Volume
- 124
- Issue
- 1
- Pages
- 1-51
- ISSN
- 0022-3808 (ISSN-L)
- 1537-534X
- OpenAlex
- W3021625863
- Cited by
- 1,604
- References
- 2
- Citations by year
- 2026: 499 · 2025: 267 · 2024: 181 · 2023: 168 · 2022: 129 · 2021: 85 · 2020: 74 · 2019: 56 · 2018: 44 · 2017: 38 · 2016: 24 · 2015: 15 · 2014: 9 · 2013: 3 · 2012: 8
- FWCI
- 105.74
- Type
- journal article
- Language
- en
- Open access
- green
- www.zora.uzh.ch
- Licence
- cc-by-nc
- Locations
- Journal of Political Economy (publishedVersion)
- Zurich Open Repository and Archive (University of Zurich) (acceptedVersion, cc-by-nc)
- Digital Access to Scholarship at Harvard (DASH) (Harvard University) (submittedVersion, cc-by)
- London School of Economics and Political Science Theses Online (London School of Economics and Political Science) (submittedVersion, other-oa)
- Spiral (Imperial College London) (submittedVersion, other-oa)
- Zurich Open Repository and Archive (University of Zurich) (submittedVersion, cc-by-nc)
- Zurich Open Repository and Archive (University of Zurich)
- Funders
- Grantham Foundation for the Protection of the Environment
- Economic and Social Research Council (PTA-026-27-2756, ES/I015760/1, ES/M010341/1, ES/K006576/1)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
- Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy, Environment, and Transportation Policies
- Social Sciences › Business, Management and Accounting › Marketing › Environmental Sustainability in Business
- Keywords
- carbon tax, path dependence, directed technical change, automotive industry, clean technology innovation, internal combustion engines, electric vehicles, hydrogen vehicles, hybrid vehicles, fuel prices, patents, climate policy, innovation spillovers
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