Innovations and the economics of new technology spreading within and across users: gaps and way forward

R&D subsidies are often considered the main policy tool to stimulate the competitiveness and the innovativeness of firms. This is especially true for innovations designed to produce greener products or cleaner and more energy efficient technologies. However, a consistent literature has now shown that, even when a clean or a cost-reducing technology is ready available in the market, its spreading within (intra) or across (inter) households or firms takes several years and in some cases decades. Therefore, it is not only important to generate innovations (via investments in R&D) but it is also important that such innovations are adopted and used by firms. This paper briefly illustrates the main theoretical approaches to the analysis of the factors loading to inter-firm diffusion and emphasise the existing gap led by the paucity of literature on intra-firm diffusion. A final section briefly discusses some methodological issues surrounding the diffusion of consumer (non-durable) technologies within and across households and how ad hoc models can be used to test the validity of environmental policies. (c) 2007 Elsevier Ltd. All rights reserved.