Network effects and environmental externalities: Do clean technologies suffer from excess inertia?

Second, we study whether excess inertia can occur if the emission tax is not optimally set. We then find that a constant tax that only accounts for the environmental damage caused by the dirty good may lead to excess inertia. Excess inertia could happen even if the clean technology is proprietary, and the technology owner has incentives to sponsor the initial market diffusion of the technology.