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.