Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312060 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11550
Publisher: 
CESifo GmbH, Munich
Abstract: 
We analyze how a major negative shock to the producers of fossil fuels may lead to a shift from dirty to clean R&D along the supply chain. First, we develop a theoretical framework of directed technical change, showing that adjustment costs in R&D activity can lead fossil energy sector suppliers to shift their R&D activity towards clean innovation more than other firms, as a consequence of a negative oil price shock. Second, we investigate the impact of a major drop in the oil price in 2014 on clean R&D. Relying on rich firm level trade data, we propose a novel method of identifying firms' exposure to the price shock. We find that more exposed firms increased their clean R&D investments more than less exposed firms. Our findings contribute to the understanding of the drivers of clean technological change, which is vital to assess the effectiveness of different climate policy measures, including carbon pricing.
Subjects: 
clean innovation
supply chains
carbon pricing
JEL: 
D25
F18
O31
Q55
Q58
Document Type: 
Working Paper
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