In this episode of the CLE's vlog series, Luca Baltensperger (ETH Zurich) discusses the study "Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty?" with Prof. Ralf Martin (Imperial College London). 
In their study, Ralf Martin and his co-authors Prof. Philippe Aghion (College de France), Prof. Roland Bénabou (Princeton), and Prof. Alexandra Roulet (INSEAD) investigate the joint effect of consumers' environmental concerns and product-market competition on firms' decisions whether to innovate “clean” or “dirty”. They develop a step-by-step innovation model to capture the basic intuition that socially responsible consumers induce firms to escape competition by pursuing greener innovations. To test and quantify the theory, the authors bring together patent data from the automobile industry, survey data on environmental values, and competition measures. Results suggest that the combination of historically realistic increases in prosocial attitudes and product market competition can have the same effect on green innovation as major increase in fuel prices.  
Paper References:
Philippe Aghion - College de France  
Roland Bénabou - Princeton University
Ralf Martin - Imperial College London
Alexandra Roulet - INSEAD  
Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty?
https://www.nber.org/papers/w26921 
Audio Credits for Trailer:
AllttA by AllttA  https://youtu.be/ZawLOcbQZ2w

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