No evidence of counteracting policy effects on European solar power invention and diffusion

Abstract

In this paper, the questions of how support policies affect invention and diffusion of solar PV technology and whether the effect is heterogeneous and counteracting are investigated in order to help policy makers produce a better policy mix. The policies (and policy proxies) investigated are Feed-in-tariffs (FITs), Public R&D stock and flow, Environmental tax, and Environmental Policy Stringency Index. The policies are within the control of national government and no EU level policies are investigated. Evaluating policies on several dimensions is highly important since there is a risk that policies can promote one aspect of technological progress such as invention but derail diffusion. A Schumpeterian technological development approach is utilised on a panel dataset covering 23 European countries between 2000 and 2019. Two econometric approaches are employed, a negative binomial regression model is used to assess inventions and a panel data fixed effect regression is used for the diffusion model. The empirical findings suggest that no counteracting policy effects were present.