Theoretical Approaches and the State-of-the-Art in Accounting for Technological Change
Chapters 2 and 3 on the macroeconomic effects showed the importance of accounting for technological change in modelling. If technological change towards reducing pollution is induced by environmental policy given environmental targets can be achieved more cost-effectively.1 Thus, there is an inherent danger of overestimating the economic costs of mitigation if future technology improvements are not taken into account. In particular, it also has to be considered that implementing additional environmental policies can influence the path or the speed of future innovations in itself.
The correlations between environmental protection and innovations have been the subject of more intensive discussion for several years now but still comprise a comparatively new research field when analysing the economic impacts of environmental protection. There are several empirical studies of this subject but these do not cover the entire field and conclusions are ambiguous. Therefore it is necessary, alongside empiricism, to rely on theory to an increased extent in order to derive hypotheses.
This chapter provides an overview of theoretical and empirical approaches to account for technological change. First, the relevant terms are defined in an introductory section. Then various paradigms are presented and discussed with regard to the determinants of innovation: environmental economics, institutional and evolutionary economics, the concept of systems of innovation used in innovation research, regulatory economics and policy analysis. Finally, based on this overview, a short empirical survey on the state of the art is presented.
KeywordsWind Turbine Environmental Policy Technological Change Innovation System Environmental Management System
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