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Who Should Drive Green Technology Transitions in Developing Countries: State-Owned Enterprises versus Private Firms

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dc.contributor.authorDato, Prudence
dc.contributor.authorKrysiak, Frank
dc.contributor.authorNolde, Christian
dc.contributor.authorTimilsina, Govinda R.
dc.date.accessioned2023-07-17T21:54:38Z
dc.date.available2023-07-17T21:54:38Z
dc.date.issued2023-07-17
dc.description.abstractGreen technologies, such as renewable energy, often require adaptation to local conditions, such as high humidity, high altitudes or the specifics of a country’s infrastructure, to achieve a maximal technical efficiency and a long lifetime of investments. This poses a problem for green technology transitions, as adaptations usually imply protected intellectual property rights and thus market imperfections that can lead to higher prices and thereby a lower uptake of the green technology. An alternative could be to use state-owned enterprises to adapt and promote green technologies, such as public utilities, which are more easily steered toward pursuing societal objectives. However, many empirical studies find state-owned enterprises to be less efficient. This theoretical contribution investigates the question whether a green technology transition that requires research and development is better driven by private firms or state-owned enterprises. The paper adapts a model to this setting, derives possible market outcomes from this model, investigates research and development and production decisions of private firms and a state-owned enterprise, and compares the welfare implications of the two options. The results show that there are cases where the cost inefficiency of the state-owned enterprise dominates (for example, if competition of directly importing firms reduces possible markups of private innovating firms), but also cases where a state-owned enterprise is the preferred choice (for example, if several private firms would adapt the technology, causing over-innovation). Most importantly, this is not solely a question of comparing costs, but rather of comparing market outcomes. For example, the use of a state-owned enterprise can avoid the often found problem of overinvestment in research and development by private firms and, in many cases, a state-owned enterprise will induce a wider diffusion of the green technology.en
dc.identifierhttp://documents.worldbank.org/curated/en/099340506272328622/IDU02c6bd7a505763045de0bf370d4a9425ee183
dc.identifier.doi10.1596/1813-9450-10506
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/40018
dc.languageEnglish
dc.language.isoen
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers; 10506
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectGREEN TECHNOLOGY
dc.subjectINNOVATION
dc.subjectLOCAL ADAPTATION
dc.subjectIMPERFECT COMPETITION
dc.subjectSTATE-OWNED ENTERPRISES
dc.subjectPUBLIC FIRMS
dc.subjectEMISSIONS POLICY
dc.subjectEMISSIONS TAX
dc.subjectENVIRONMENTAL ECONOMICS
dc.subjectGREEN TECHNOLOGY RESEARCH
dc.titleWho Should Drive Green Technology Transitions in Developing Countriesen
dc.title.subtitleState-Owned Enterprises versus Private Firmsen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleWho Should Drive Green Technology Transitions in Developing Countries: State-Owned Enterprises versus Private Firms
okr.date.disclosure2023-06-27
okr.date.lastmodified2023-06-27T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099340506272328622/IDU02c6bd7a505763045de0bf370d4a9425ee183
okr.guid099340506272328622
okr.identifier.docmidIDU-2c6bd7a5-5763-45de-bf37-d4a9425ee183
okr.identifier.doi10.1596/1813-9450-10506
okr.identifier.doihttp://dx.doi.org/10.1596/1813-9450-10506
okr.identifier.doihttps://doi.org/10.1596/1813-9450-10506
okr.identifier.externaldocumentum34103089
okr.identifier.internaldocumentum34103089
okr.identifier.reportWPS10506
okr.import.id1136
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099340506272328622/pdf/IDU02c6bd7a505763045de0bf370d4a9425ee183.pdfen
okr.topicEnvironment::Climate Change Mitigation and Green House Gases
okr.topicEnvironment::Environmental Economics & Policies
okr.topicEnvironment::Environmental Strategy
okr.topicPrivate Sector Development::Competitiveness and Competition Policy
okr.unitDEC-Sustainability & Infrastruct (DECSI)
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