innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g. electric and hybrid) patents across 80 … tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers … and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow …

dirty innovation and production; (ii) optimal policy involves both “carbon taxes” and research subsidies, so that excessive … the switch to clean innovation under laissez-faire when the two inputs are substitutes. Under reasonable parameter values …