Work

The Induced Innovation Hypothesis and Energy-Saving Technological Change

Year: 1999

Type: article

Abstract: We develop a methodology for testing Hick?s induced innovation hypothesis by estimating a product-characteristics model of energy-using consumer durables, augmenting the hypothesis to allow for the influence of government regulations. For the products we explored, the evidence suggests: (i) that the rate of overall innovation was independent of energy prices and regulations, (ii) the direction of innovation was responsive to energy price changes for some products but not for others, (iii) energy price changes induced changes in the subset of technically feasible models that were offered for sale, (iv) this responsiveness increased substantially during the period after energy-efficiency product labeling was required, and (v) nonetheless, a sizeable portion of efficiency improvements were autonomous.

Source: The Quarterly Journal of Economics

DOI: 10.1162/003355399556188

Authors: R. G. Newell, A. B. Jaffe, R. N. Stavins

Institutions: Resources For The Future, National Bureau of Economic Research, Brandeis University, Harvard University

Language: English

Topic: Energy, Environment, and Transportation Policies

Subfield: Renewable Energy, Sustainability and the Environment

Field: Energy

Domain: Physical Sciences

SDGs: Industry, innovation and infrastructure, Affordable and clean energy

Open Access status: green