The induced innovation hypothesis and energy-saving technological change

Published

Journal Article

We develop a methodology for testing Hicks'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 that (i) 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 sizable portion of efficiency improvements were autonomous.

Full Text

Duke Authors

Cited Authors

  • Newell, RG; Jaffe, AB; Stavins, RN

Published Date

  • January 1, 1999

Published In

Volume / Issue

  • 114 / 3

Start / End Page

  • 941 - 975

International Standard Serial Number (ISSN)

  • 0033-5533

Digital Object Identifier (DOI)

  • 10.1162/003355399556188

Citation Source

  • Scopus