The Effect of Public Policies on Inducing Technological Change in Solar Energy

Using patent statistics related to solar power on a panel of eleven countries from 1990 to 2008, we build a reduced-form model to analyze the role that public policies play in fostering innovation. We conclude that public expenditure on R&D and feed-in tariffs have a significant effect on the development of solar energy. We also find a significant effect of electricity price, attributable to rising energy prices. Using patent citations, we estimate the knowledge flows available to inventors in each country over time and we find that the marginal productivity of R&D has a positive and significant effect on innovation.