Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/51319
Authors: 
Dietrich, Antje-Mareike
Sieg, Gernot
Year of Publication: 
2011
Series/Report no.: 
Economics Department Working Paper Series 12
Abstract: 
This article shows that in the presence of environmental externalities, it may be welfare enhancing to overcome a technological lock-in by a deadend technology through governmental intervention. It is socially desirable to subsidize a dead-end technology if its environmental externality is small relative to the one of the established technology, if the installed base and/or the strength of the network effect is small and if future generations matter. Applying our results to the private transport sector, governments promoting alternatives to gasoline-driven vehicles have to be aware of these opposing welfare effects.
Subjects: 
environmental externalities
network effects
private transport
technological change
JEL: 
O33
L92
Q55
Document Type: 
Working Paper

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