Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry

Philippe Aghion (1, 2, 3, 4, 5) , Antoine Dechezleprêtre (6, 7) , David Hémous (8) , Ralf Martin (9, 7, 6) , John van Reenen (10, 6)

1 PJSE - Paris Jourdan Sciences Economiques
2 PSE - Paris School of Economics
3 CIFAR - Canadian Institute for Advanced Research
4 Department of Economics, Harvard University
5 Collège de France - Chaire Economie des institutions, de l'innovation et de la croissance
6 CEP - LSE - Centre for Economic Performance
7 Grantham Research Institute on Climate Change and the Environment
8 INSEAD - Institut Européen d'administration des Affaires
9 Imperial College London
10 NBER - National Bureau of Economic Research [New York]

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.

Mots clés: Carbon Taxes

Domaines: Economies et finances

Philippe Aghion, Antoine Dechezleprêtre, David Hémous, Ralf Martin, John van Reenen. Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry. Journal of Political Economy, 2016, 124 (1). ⟨halshs-01496920⟩