Scandinavian Working Papers in Economics

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

No 445: Finance and Innovative Investment in Environmental Technology: The Case of Sweden

Hans Lööf (), Gustav Martinsson () and Ali Mohammadi ()
Additional contact information
Hans Lööf: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology
Gustav Martinsson: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology
Ali Mohammadi: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology

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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