Government Choices in Innovation Funding (With Reference to Climate Change)

Abstract

Huge amounts of money will soon be spent by governments and private entities to develop technology to reduce the costs of climate change mitigation and adaptation, and to deploy new energy and transportation infrastructures. Incredibly, we still lack any good idea of the best means of providing massive amounts of government or private money so as to promote the most innovation and technology diffusion at the lowest cost. This Article seeks to support better analyses of, and decision making regarding, the choices of government innovation-funding mechanisms by discussing the limits of current analyses and providing a taxonomy of such measures. It also proposes future work to better analyze what we know about these choices and their relative effectiveness, and it discusses new measures to expand our knowledge base, which include: (1) better tracking of government innovation-funding inputs and outputs; (2) better documentation of and self-conscious decision making regarding funding choices; and (3) creating experiments that go beyond existing natural experiments.

Keywords: climate change, innovation, invention, patent, licensing, subsidies, procurement, direct development, commons, market regulation, intellectual property, antitrust

JEL Classification: H20, H40, H50, K20, K39, L40, O30, O31, O32, O33, O34, O38, O39, P50, Q00