Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This report discusses how financing difficulties can affect private sector innovation investments in environmental technology applied to the Swedish setting. Innovative investments are often intangible, the outcomes are highly uncertain, and information asymmetries between entrepreneurs and outside investors are potentially severe. These factors make external finance costly and drive investment in environmental technology below its socially desirable level. Recent evidence from the literature on financing and innovation suggests that financing constraints on innovation are likely economically significant. Therefore, policies and financial developments that affect the availability of finance can have important effects on economy wide rates of environmental technology innovation.

Keywords: Clean technology; Innovation Investments; Financial constraints; Spillovers; Sustainable growth

JEL-codes: O32; O33; Q55; Q56; Q58

44 pages, January 16, 2017

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