Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125744
Authors: 
Baccianti, Claudio
Löschel, Andreas
Year of Publication: 
2015
Series/Report no.: 
WWWforEurope Working Paper 85
Abstract: 
The European Union has implemented demand push and technology pull policies to foster innovation on the energy and resource efficiency of capital goods. The state of the art of general equilibrium modelling applied to environmental policy rarely treats product and process innovation separately and product quality is, in the best case, exogenous. We develop a dynamic multi-sector CGE model that distinguishes between R&D-based process innovation for all firms, endogenous product innovation in the capital good sector and adoption decisions with respect to the installation of new capital vintages in the rest of the economy. Our results support the previous literature in finding that aggregate innovation declines following an energy tax but whereas process innovation is reduced, product innovation actually rises. We find that demand pull policies are less effective than product-related R&D subsidies to reduce aggregate energy intensity.
Subjects: 
Ecological innovation
Economic growth path
Industrial policy
Innovation
Innovation policy
Intangible assets
New technologies
Sustainable growth
JEL: 
O31
O40
O41
Document Type: 
Working Paper
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