Fuel prices and the invention crowding out effect: Releasing the automotive industry from its dependence on fossil fuel

- We test if higher fuel prices induce firms to redirect their inventive activities
- We employ SOM technique to detect green and non-green patent clusters
- We find that higher fuel prices redirect inventions from non-green to green technological fields
- Technological relatedness between automotive technologies negatively impacts this shift
- We observe that fuel prices cause a shift from green to other green inventions

The paper aims to shed some light on the impact of fuel prices and technological relatedness on green and non-green patenting dynamics and lock in to fossil fuel technologies. Specifically, we investigate whether green technology efforts come at the expense of other environmental or non-environmental invention activity. To do so, we employ Self-Organising Maps (SOMs) to detect the main technological domains exploited by the automotive industry during 1982-2008, using Triadic Patent Families (TPF) to proxy for the technological efforts in each technology field.The paper adds to the literature by examining explicitly whether fuel prices (used as a proxy for carbon tax) and technological proximity foster the substitution of non-green patents by green ones. In addition, we provide a novel contribution by testing whether these determinants impact on the competition among low-emitting vehicles.Our findings suggest that higher, tax-inclusive fuel prices are effective at redirecting patenting activity from non-green to green technology fields. Moreover, we observe that tax-inclusive fuel prices also induce a shift in patenting activity when we perform the analysis solely on green technology fields. Although this might result in potential lock-in to sub-optimal substituting technologies, our findings suggest that competition in the domain of environmental technology is focused mainly on 'greening' conventional cars and developing low-emission vehicles.