Lecture13.2

Question 1

Why intervene in innovation processes?

Answer 1

Rationales for Policy Interventions:
1. Correcting for market failures:
- Negative environmental effects not reflected in market price.
- Policy provides investment/market incentives.
2. Shaping innovation processes:
- Non-linear with feedback loops.
- Types: Technology Push Policy, Demand-Pull Policy, Systemic Interface Improvements.

Question 2

What are the types of innovation policies?

Answer 2

Types of Innovation Policies:
- Technology Push Policy:
- Increases technology supply (e.g., R&D funding, tax credits).
- Demand-Pull Policy:
- Stimulates demand or changes market conditions (e.g., renewable portfolio standards).
- Systemic Interface Improvements:
- Enhances feedback mechanisms across the innovation process.

Question 3

How do technology characteristics affect policy?

Answer 3

Insights from Research:
- Effectiveness depends on technology patterns -> Different
technologies follow different innovation patterns (e.g., wind vs. solar).
- Demand-pull can lead to premature lock-in (e.g., thin-film solar were not dominant enough).
- Policy can have unintended effects (e.g. policies disadvantages the diffusion of
batteries in Germany and California) -> unintended barriers to innovation
- Policy creates international spillovers (e.g., solar innovation abroad -> in some case very beneficial).
- Policies that foster interaction can play an important role (e.g. Lithium-Ion-Batteries:
the establishment of platforms and networks fostered innovation)
- There is no one-size-fits-all solution that lasts forever.

Question 4

What are unintended effects of policies?

Answer 4

Unintended Effects:
- Premature lock-in (e.g., early solar technologies limited).
- Disadvantaged diffusion (e.g., batteries in Germany).
- Strong international spillovers (e.g., solar industry innovations in other nations).

Question 5

What factors foster innovation?

Answer 5

Fostering Innovation:
- Interaction-focused policies (e.g., platforms/networks for Lithium-Ion Batteries).
- No one-size-fits-all solution; policies must adapt.

Question 6

What is the summary of Innovation Policy insights?

Answer 6

Summary:
- Policies play an important role in innovation.
- Different policies target different leverage points.
- Effects vary by firm/technology.