Abstract:
The objective of this article is to investigate whether market factors, especially the upward trend in oil price, and whether regulatory and fiscal public policies positively affect innovation in the biodiesel sector. Also, we intend to investigate whether the proportion of government spending on Research and Development (R&D) has a positive influence on biodiesel innovation. The relation between the relative oil price and innovation in biodiesel is based on the induced innovation theory proposed by Hicks (1932) and formalized by Ahmad (1966). Deposited patents by the resident were used to measure innovation in Brazil, United States, Germany, France, Spain, United Kingdom, Austria, and the Czech Republic between 2000 and 2011. They are the main producer countries. The Generalized Moments Method (GMM) estimator is applied to the Poisson model in a Fixed Effect panel. It is proper for count data and for taking into account the endogeneity. The results indicate that the oil price and public policies are demand-pull factors that stimulate innovation in biodiesel by increasing its demand and expected return. On the supply side, government investment in R&D is a technology-push factor because it increases the technological capacity that benefits the biodiesel sector.
Keywords:
biodiesel; innovation; oil price; public policies
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