TY - JOUR
T1 - Competing Recombinant Technologies for Environmental Innovation
T2 - Extending Arthur's Model of Lock-In
AU - Zeppini, Paolo
AU - van den Bergh, Jeroen
PY - 2011
Y1 - 2011
N2 - 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.
AB - 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.
UR - http://dx.doi.org/10.1080/13662716.2011.561031
U2 - 10.1080/13662716.2011.561031
DO - 10.1080/13662716.2011.561031
M3 - Article
SN - 1366-2716
VL - 18
SP - 317
EP - 334
JO - Industry and Innovation
JF - Industry and Innovation
IS - 3
ER -