Environmental innovation and industrial dynamics:

In spite of the increasing concern on the role of technological change and innovation as a key factor of sustainability, environmental economics has paid little attention to the understanding of environmental innovation. Until recently, scholars working in environmental economics consider environmental innovation as induced by regulation. Within this perspective, one of the main research questions is the incentive effect upon innovation of different environmental policy instruments. This question is often tackled in quantitative terms searching to evaluate which policy instrument creates the highest incentive to innovate. In the literature, the focus is more on the design and the implementation of various policy instruments, than on the explanation of the innovation process itself. In such a policy oriented approach, an explicit and thorough representation of the innovation process is often missing, which creates a strong bias in the analysis of policy effects. As a matter of fact, environmental innovations cannot be reduced to a systematic response to environmental regulation, but should be considered as the result of a complex and interactive process. On that point, evolutionary economics can provide relevant contributions for a better understanding of the determinants and features of environmental innovations. The purpose of this paper is to discuss these contributions and to show that the evolutionary framework enables to put the study of environmental innovations in an industrial dynamics perspective.