Transition to Clean Technology

Daron  Acemoglu; Ufuk  Akcigit; Douglas  Hanley; William R. Kerr

Article | Journal of Political Economy

Transition to Clean Technology

by Daron Acemoglu, Ufuk Akcigit, Douglas Hanley and William R. Kerr

Abstract

We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation, in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model's quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.

Keywords: Technological Innovation; Entrepreneurship; Environmental Sustainability; Green Technology Industry;

Format: Print

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Citation:

Acemoglu, Daron, Ufuk Akcigit, Douglas Hanley, and William R. Kerr. "Transition to Clean Technology." Special Issue on Climate Change and the Economy. Journal of Political Economy 124, no. 2 (February 2016): 52–104.

The global race for talent is on, with countries and businesses competing for the best and brightest. Foreign talent has transformed U.S. science and engineering, reshaped the economy, and influenced society at large. But America is bogged down in thorny debates on immigration policy, and the world around the United States is rapidly catching up, especially China and India. The future is uncertain, and the global talent puzzle deserves close examination. This book combines insights and lessons from business practice, government policy, and individual decision-making to give voice to data and ideas that should drive the next wave of policy and business practice.

Article | Harvard Business Review

Navigating Talent Hot Spots

William R. Kerr

Innovation clusters like San Francisco and Boston have long had an outsize impact on the global economy, and their influence keeps growing. In 2017, for instance, America’s ten largest tech hubs accounted for 58% of U.S. patents. Globally, cities such as Tokyo, Paris, Beijing, Shenzhen, and Seoul produced a similar proportion. The increased geographic concentration of innovation activity poses a challenge for firms based in suburban industrial parks. To stay relevant, they need to tap into urban hotbeds, but setting up operations there can be extremely expensive. In his work on global talent flows, Harvard Business School’s Kerr has seen organizations try three solutions: At one extreme, they can relocate their headquarters to a hub, as GE recently did (but make them much smaller). A less expensive strategy is to create an innovation lab or corporate outpost in a talent cluster, as Walmart did with Walmart Labs. The most conservative strategy is to run executive retreats and immersions in talent clusters—a tactic Vodafone uses effectively. These three options aren’t mutually exclusive. Given the need to stay in touch with multiple clusters, companies may want to try them all. Each one involves substantial risks that executives must manage. But together they offer a good playbook to firms that are finding themselves outside the action as the clout of a handful of cities grows.

Keywords: Talent and Talent Management; Innovation and Invention; Urban Scope; Industry Clusters; Innovation and Management;

Citation:

Kerr, William R. "Navigating Talent Hot Spots." Harvard Business Review 96, no. 5 (September–October 2018): 80–86. View Details

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The case opens in 2017 with two of the five co-founders of MISHA telling the company’s CEO Michal Portz that they believe it is time for the global venture to shut down its operations and cease investments. Portz and another co-founder believe MISHA can still work.
The case describes the origins of the ready-to-use capsule solution for shisha smokers and the evolution of MISHA from idea to product design, manufacturing, marketing, and distribution. Consequent mishaps slow down the performance of MISHA, and after five years of the product being in the market and four financing rounds, numbers are far behind what they were in the business plan. The case explores the pivots the company goes through. The central dilemma is this: should the cofounders pull the plug on the company or invest more time and money to try to turn it around? When and according to which criteria should Portz make such a decision?

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Transition to Clean Technology

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