Abstract

Environmental problems have become quite urgent in many countries. Changes in consumption patterns appear to be insufficient to bring about the necessary reductions of emissions of various types. Therefore, a large contribution to the solution of environmental problems is expected from technological change. This raises the issue of how technological change takes place and, more particularly how to promote technological change that is beneficial to long term sustainability objectives. Since market incentives are a major driving force of firms involved in the development and adoption of new technologies, it is not certain that the necessary developments will take place at sufficient speed in those cases where markets fail, i.e. in the case of environmental problems. Therefore the issue of technological change in the case of environmental problems deserves special attention.

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