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Where does energy R&D come from? Examining crowding out from energy R&D

Publication ,  Journal Article
Popp, D; Newell, R
Published in: Energy Economics
July 1, 2012

Recent efforts to endogenize technological change in climate policy models demonstrate the importance of accounting for the opportunity cost of climate R&D investments. Because the social returns to R&D investments are typically higher than the social returns to other types of investment, any new climate mitigation R&D that comes at the expense of other R&D investment may dampen the overall gains from induced technological change. Unfortunately, there has been little empirical work to guide modelers as to the potential magnitude of such crowding out effects. This paper considers both the private and social opportunity costs of climate R&D. Addressing private costs, we ask whether an increase in climate R&D represents new R&D spending, or whether some (or all) of the additional climate R&D comes at the expense of other R&D. Addressing social costs, we use patent citations to compare the social value of alternative energy research to other types of R&D that may be crowded out. Beginning at the industry level, we find no evidence of crowding out across sectors-that is, increases in energy R&D do not draw R&D resources away from sectors that do not perform R&D. Given this, we proceed with a detailed look at alternative energy R&D. Linking patent data and financial data by firm, we ask whether an increase in alternative energy patents leads to a decrease in other types of patenting activity. While we find that increases in alternative energy patents do result in fewer patents of other types, the evidence suggests that this is due to profit-maximizing changes in research effort, rather than financial constraints that limit the total amount of R&D possible. Finally, we use patent citation data to compare the social value of alternative energy patents to other patents by these firms. Alternative energy patents are cited more frequently, and by a wider range of other technologies, than other patents by these firms, suggesting that their social value is higher. © 2011 Elsevier B.V.

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Published In

Energy Economics

DOI

ISSN

0140-9883

Publication Date

July 1, 2012

Volume

34

Issue

4

Start / End Page

980 / 991

Related Subject Headings

  • Energy
  • 3802 Econometrics
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1402 Applied Economics
  • 0913 Mechanical Engineering
  • 0906 Electrical and Electronic Engineering
 

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Popp, D., & Newell, R. (2012). Where does energy R&D come from? Examining crowding out from energy R&D. Energy Economics, 34(4), 980–991. https://doi.org/10.1016/j.eneco.2011.07.001
Popp, D., and R. Newell. “Where does energy R&D come from? Examining crowding out from energy R&D.” Energy Economics 34, no. 4 (July 1, 2012): 980–91. https://doi.org/10.1016/j.eneco.2011.07.001.
Popp D, Newell R. Where does energy R&D come from? Examining crowding out from energy R&D. Energy Economics. 2012 Jul 1;34(4):980–91.
Popp, D., and R. Newell. “Where does energy R&D come from? Examining crowding out from energy R&D.” Energy Economics, vol. 34, no. 4, July 2012, pp. 980–91. Scopus, doi:10.1016/j.eneco.2011.07.001.
Popp D, Newell R. Where does energy R&D come from? Examining crowding out from energy R&D. Energy Economics. 2012 Jul 1;34(4):980–991.
Journal cover image

Published In

Energy Economics

DOI

ISSN

0140-9883

Publication Date

July 1, 2012

Volume

34

Issue

4

Start / End Page

980 / 991

Related Subject Headings

  • Energy
  • 3802 Econometrics
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1402 Applied Economics
  • 0913 Mechanical Engineering
  • 0906 Electrical and Electronic Engineering