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on Innovation |
| By: | Campiglio, Emanuele; Spiganti, Alessandro; Wiskich, Anthony |
| Abstract: | Access to finance is a major barrier to clean innovation. We incorporate a financial sector in a directed technological change model, where research firms working on different technologies raise funding from financial intermediaries at potentially different costs. We show that, in addition to a rising carbon tax and a generous but short-lived clean research subsidy, optimal climate policies include a clean finance subsidy directly aimed at reducing the financing cost differential across technologies. The presence of an endogenous financing experience effect induces stronger mitigation efforts in the short-term to accelerate the convergence of heterogeneous financing costs. This is achieved primarily through a carbon price premium of 39% in 2025, relative to a case with no financing costs. |
| Keywords: | carbon tax; endogenous growth; green financial policy; innovation policy; low-carbon transition; optimal climate policy; sustainable finance |
| JEL: | H23 O31 Q55 Q58 G18 |
| Date: | 2024–11–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126063 |
| By: | Villalba, Maria Luisa; Spinola, Danilo; Ruiz, Walter |
| Abstract: | This article explores the coevolutionary dynamics of immature innovation systems (IMIS), focusing on the role of marginalized agents often excluded from Conventional Innovation Systems (CIS). Marginalized agents, such as informal entrepreneurs or low-resource communities, are key actors in addressing local challenges but are typically overlooked in mainstream innovation processes, making it crucial to understand how they can be integrated into broader systems. Using an Agent-Based Model (ABM) based on Villalba (2023) and Ruiz et al. (2016), we examine how interactions between agents with different innovation and inclusion capabilities drive system evolution. The model integrates learning and unlearning processes, allowing agents to adapt and build capabilities over time. Through simulations that vary social thresholds, agent configurations, NOPI (Needs, Opportunities, Problems and Ideas) complexity, and the presence or absence of learning, we find that while higher social thresholds and complex NOPIs foster agent specialization, they can limit the inclusion of marginalized agents. Conversely, the absence of learning results in system stagnation despite increased short-term inclusion. By adopting a system-wide perspective, this paper contributes to the literature on innovation systems by analyzing how the relationships between marginalized and conventional actors influence inclusion dynamics. Our ABM captures the complex interplay of inclusion, coevolution, and capability complementarity within IMIS, offering deeper insights into how marginalized agents drive inclusive innovation and emphasizing the importance of fostering both innovation and inclusion capabilities for sustainable, equitable outcomes. |
| Keywords: | Coevolution; Heterogeneous agents; Immature innovation system; Developing countries; Excluded agents |
| Date: | 2024–11–08 |
| URL: | https://d.repec.org/n?u=RePEc:akf:cafewp:31 |
| By: | Cowx, Mary (Arizona State U); Lester, Rebecca (Stanford U); Nessa, Michelle (Michigan State U) |
| Abstract: | We study the tax payment and innovation consequences of limiting the tax deductibility of research and development (“R&D†) expenditures. Beginning in 2022, U.S. companies are required to capitalize and amortize R&D rather than immediately deduct these expenditures. We utilize variation in U.S. firms’ fiscal year ends to test the effects of the R&D tax change in a difference-in-differences framework. We first document that affected U.S. firms’ cash effective tax rates increase by 11.9 percentage points (62%), on average. We then test and find decreases in R&D investment among domestic-only, research-intensive, and constrained firms. In aggregate, these estimates translate to a reduction in R&D of $12.2 billion in the first year among the most research-intensive firms. Further, we observe decreased capital expenditures and share repurchases among affected companies, suggesting that firms also reduced other types of investment and shareholder payout to meet the increased cash tax liability. The paper provides policy relevant evidence about the significant real effects of limiting innovation tax incentives. |
| JEL: | H25 M41 M48 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:stabus:4192 |