The Quest for Adequate Technology-Push and Demand-Pull Policies: Country-Level Spillovers and Incentives for Non-Incremental Innovation

39 Pages Posted: 1 Feb 2011

See all articles by Michael Peters

Michael Peters

ETH Zürich

Malte Schneider

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC)

Tobias Griesshaber

ETH Zürich

Volker H. Hoffmann

ETH Zürich

Date Written: January 31, 2011

Abstract

How to adequately foster technical change is a highly relevant and intricate question in the arena of policymaking. This study contributes to addressing this challenge, which is especially important in the area of environmental technologies that are subject to market failures. To shed more light on how the policymaker should use the policy archetypes demand-pull and technology-push support, we extend the current literature by addressing two gaps. First, the effect of domestic and foreign demand-pull policies on innovation in a country is addressed. Second, we examine the impact of demand-pull and technology-push on incremental and non-incremental innovation. We analyzed the case of photovoltaic power by combining a descriptive analysis of historic global innovation dynamics and a panel analysis on 15 countries over the period 1978 through 2007 with patent data. Three key findings emerged: First, we show that there are substantive innovation spillovers of national demand-pull policies. Second, demand-pull policies only foster incremental innovation and we find some anecdotal evidence that in phases of rapid induced market growth such policies even disincentivize non-incremental innovation. Third, only technology-push support is able to incentivize non-incremental innovation. Based on these findings, we discuss the need to globally coordinate demand-pull policies to circumvent the innovation-spillover problem and to incentivize non-incremental innovation via increased technology-push funding and design modifications of demand-pull policies.

Keywords: Technology-Push, Demand-Pull, Innovation Spillovers, Non-Incremental Innovation, Solar Power

JEL Classification: O30, O38

Suggested Citation

Peters, Michael and Schneider, Malte and Griesshaber, Tobias and Hoffmann, Volker H., The Quest for Adequate Technology-Push and Demand-Pull Policies: Country-Level Spillovers and Incentives for Non-Incremental Innovation (January 31, 2011). Available at SSRN: https://ssrn.com/abstract=1752414 or http://dx.doi.org/10.2139/ssrn.1752414

Michael Peters (Contact Author)

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

Malte Schneider

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC) ( email )

ETH-Zentrum
Zurich, CH-8092
United States

Tobias Griesshaber

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

Volker H. Hoffmann

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

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