Marion Dumas

Meeting the challenge of climate-change mitigation involves a rapid and comprehensive transformation of the global economy away from high-emitting production systems toward low-carbon ones. This chapter illustrates how complex-systems approaches are uniquely well suited to understanding the drivers, barriers, and risks arising from such a technological transformation. We first consider the dynamics at play in growing new technological systems. We contrast two empirically well-documented cases (solar photovoltaics and electric vehicles) to show the central importance of technological interdependencies in shaping the dynamics of innovation and in crafting effective policy strategies. In particular, we argue that promoting low-carbon technologies that are less modular may require a more targeted and coordinated approach than is standard in innovation policy. We then turn to the dynamics at play in phasing out old technological systems. A central question is whether the progress of low-carbon technologies can on its own displace fossil-fuel-based technologies without policies that actively phase out or discourage these technologies. We highlight the different feedback processes that are key to answering this question (including the interaction between changes in technology costs, the rebound effect and the green paradox, and the role of heterogeneous expectations), some areas where better modeling is needed, and open policy questions. Finally, we argue that accounting for the heterogeneous nature of capital assets, skills, and regional capabilities, as well as understanding systemic interdependencies, is essential to anticipating disruption and stranding and crafting policies to mitigate transition risks.

Significant progress reconciling economic activities with a stable climate requires radical and rapid technological change in multiple sectors. Here, we study the case of the automotive industry’s transition to electric vehicles, which involved choosing between two different technologies: fuel cell electric vehicles (FCEVs) or battery electric vehicles (BEVs). We know very little about the role that such technological uncertainty plays in shaping the strategies of firms, the efficacy of technological and climate policies, and the speed of technological transitions. Here, we explain that the choice between these two technologies posed a global and multisectoral coordination game, due to technological complementarities and the global organization of the industry’s markets and supply chains. We use data on patents, supply-chain relationships, and national policies to document historical trends and industry dynamics for these two technologies. While the industry initially focused on FCEVs, around 2008, the technological paradigm shifted to BEVs. National-level policies had a limited ability to coordinate global players around a type of clean car technology. Instead, exogenous innovation spillovers from outside the automotive sector played a critical role in solving this coordination game in favor of BEVs. Our results suggest that global and cross-sectoral technology policies may be needed to accelerate low-carbon technological change in other sectors, such as shipping or aviation. This enriches the existing theoretical paradigm, which ignores the scale of interdependencies between technologies and firms.

Performing a dramatic act of religious devotion, creating an art exhibit, or releasing a new product are all examples of public acts that signal quality and contribute to building a reputation. Signalling theory predicts that these public displays can reliably reveal quality. However, data from ethnographic work in South India suggests that more prominent individuals gain more from reputation-building religious acts than more marginalized individuals. To understand this phenomenon, we extend signalling theory to include variation in people’s social prominence or social capital, first with an analytical model and then with an agent-based model. We consider two ways in which social prominence/capital may alter signalling: (i) it impacts observers’ priors, and (ii) it alters the signallers’ pay-offs. These two mechanisms can result in both a ’reputational shield,’ where low quality individuals are able to ’pass’ as high quality thanks to their greater social prominence/capital, and a ’reputational poverty trap,’ where high quality individuals are unable to improve their standing owing to a lack of social prominence/capital. These findings bridge the signalling theory tradition prominent in behavioural ecology, anthropology and economics with the work on status hierarchies in sociology, and shed light on the complex ways in which individuals make inferences about others. This article is part of the theme issue ’The language of cooperation: reputation and honest signalling’.

Previous studies have modeled green technological change as innovations in the process of production (e.g., abatement technologies or energy sources). But greening the economy also requires changing products. The automotive industry, for example, needs to massively deploy alternative-fuel vehicles. Product manufacturing occurs within supply-chain networks, and developing new products typically requires complementary investments by suppliers. We study the incentives for green product innovation in industrial networks and how policies can affect them. We follow the industrial organization theory of product differentiation, and model green product innovations as upgrades in product quality where inputs from suppliers are essential for upgrading quality. We show that suppliers can be innovation bottlenecks and render policy instruments less effective. We provide an explicit mechanism for the role of institutions that help actors coordinate on the long-term direction of innovation. We discuss how our results help organize several findings from case studies in the automotive industry.

The institution of citizen suits is a decentralized form of public participation that allows citizens to influence the implementation of public laws in courts. How does this institution influence policymaking? This article proposes a model of citizen suits. It then analyzes how this institution influences legislative decisions. The legislature bargains to choose the budget, distributive spending, and spending on an ideologically contested public good (e.g., health care or environmental protection). I find that citizen suits enable courts to forge a compromise between opponents and proponents of the public good by responding to the diverse claims of citizens. Anticipating the mobilization of citizens in courts, legislators in turn craft more socially efficient bills, with less distributive spending, which better represent the distribution of preferences for the public good compared to when citizens have no role in the implementation of legislation.