The Induced Innovation Hypothesis and Energy-Saving Technological Change

RFF Discussion Paper 98-12 (Revised)

43 Pages Posted: 26 Jun 2000

See all articles by Richard G. Newell

Richard G. Newell

Duke University - Nicholas School of Environment; National Bureau of Economic Research (NBER); Resources for the Future

Adam B. Jaffe

Brandeis University; Motu Economic and Public Policy Research; National Bureau of Economic Research (NBER)

Robert N. Stavins

Harvard University - Harvard Kennedy School (HKS); Resources for the Future; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: October 1998

Abstract

We develop a methodology for testing Hick?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: (i) that 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 sizeable portion of efficiency improvements were autonomous.

JEL Classification: L51, O31, O38, Q40, Q20, Q48

Suggested Citation

Newell, Richard G. and Jaffe, Adam B. and Stavins, Robert N., The Induced Innovation Hypothesis and Energy-Saving Technological Change (October 1998). RFF Discussion Paper 98-12 (Revised), Available at SSRN: https://ssrn.com/abstract=223777 or http://dx.doi.org/10.2139/ssrn.223777

Richard G. Newell (Contact Author)

Duke University - Nicholas School of Environment ( email )

Box 90228
Durham, NC 27708-0328
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National Bureau of Economic Research (NBER) ( email )

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Resources for the Future ( email )

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Adam B. Jaffe

Brandeis University ( email )

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HOME PAGE: http://www.brandeis.edu/global/people/faculty/jaff

Motu Economic and Public Policy Research ( email )

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HOME PAGE: http://motu.org.nz

National Bureau of Economic Research (NBER)

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Robert N. Stavins

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-1820 (Phone)
617-496-3783 (Fax)

Resources for the Future

1616 P Street, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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