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  3. American Economic Review
  4. March 2002
  5. Induced Innovation and Energy Prices

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Induced Innovation and Energy Prices

  • David Popp
American Economic Review
vol. 92, no. 1, March 2002
(pp. 160–180)
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Abstract

I use U.S. patent data from 1970 to 1994 to estimate the effect of energy prices on energy-efficient innovations. Using patent citations to construct a measure of the usefulness of the existing base of scientific knowledge, I consider the effect of both demand-side factors, which spur innovative activity by increasing the value of new innovations, and supply-side factors, such as scientific advancements that make new innovations possible. I find that both energy prices and the quality of existing knowledge have strongly significant positive effects on innovation. Furthermore, I show that omitting the quality of knowledge adversely affects the estimation results. (JEL O31, Q40, Q42)

Citation

Popp, David. 2002. "Induced Innovation and Energy Prices ." American Economic Review, 92 (1): 160–180. DOI: 10.1257/000282802760015658

JEL Classification

  • O31 Innovation and Invention: Processes and Incentives
  • Q41 Energy: Demand and Supply; Prices
  • Q42 Alternative Energy Sources