Green product innovation in industrial networks: A theoretical model

Previous studies have modeled green technological change as innovations in the process of production (e.g., abatement technologies or energy sources). But greening economy also requires changing products. The automotive industry, for example, needs to massively deploy alternative-fuel vehicles. Product manufacturing occurs within supply-chain networks, and developing new products typically complementary investments by suppliers. We study incentives product innovation industrial networks how policies can affect them. follow organization theory differentiation, model upgrades quality where inputs from suppliers are essential upgrading quality. show that be bottlenecks render policy instruments less effective. provide an explicit mechanism role institutions help actors coordinate on long-term direction innovation. discuss our results organize several findings case industry.