The dynamics of environmental innovations : three stylised trajectories of clean technology

We explore the dynamics of environmental innovations developed by firms in order to comply with environmental regulations on the basis of a micro-simulation model of industrial dynamics. How do the firms competing in the same industry cope with the environmental dimension without altering their productive efficiency nor the performances of the product? We focus on clean technology which aims at combining environmental and productive dimensions thanks to innovation offsets. The results of our simulations show that an innovative strategy based on a good balancing between environmental and productive dimensions takes more time to develop and needs to face with a competence destroying effect. Finally we study the favourable conditions to the development of this type of clean technology and we draw some policy implications.