Enabling Diffusion: How Complementary Inputs Moderate the Response to Environmental Policy

Posted: 18 Jan 2014

See all articles by Kira Fabrizio

Kira Fabrizio

Emory University

Olga Hawn

UNC Kenan-Flagler Business School

Date Written: January 17, 2014

Abstract

While policies encouraging diffusion of new technologies provide incentives for adopting the focal good, they typically ignore the ecosystem of complementary goods and services. Based on existing literature on indirect network effects, we argue that when there is less availability of complementary goods, policies have a smaller impact on diffusion. Using a natural experiment based on the establishment of state-level solar carve-out policies, we demonstrate that solar power installations increased substantially more after the policy in cities where a critical complementary good – qualified installers – was more available.

Keywords: Diffusion processes; Complements; Strategy; Externalities; Government policy; Electric utilities

Suggested Citation

Fabrizio, Kira and Hawn, Olga, Enabling Diffusion: How Complementary Inputs Moderate the Response to Environmental Policy (January 17, 2014). Research Policy, Vol. 42, No. 5, 2013, Available at SSRN: https://ssrn.com/abstract=2380638

Kira Fabrizio

Emory University ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

Olga Hawn (Contact Author)

UNC Kenan-Flagler Business School ( email )

Chapel Hill, NC 27599
United States

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