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Deregulation and differentiation: Incumbent investment in green technologies

Authors

  • Eun-Hee Kim

    Corresponding author
    • Department of Strategic Management and Public Policy, The School of Business, The George Washington University, Washington, District of Columbia, U.S.A.
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Correspondence to: Eun-Hee Kim, Assistant Professor, Department of Strategic Management and Public Policy, The School of Business, The George Washington University, 615D Funger Hall, 2201 G Street NW, Washington, DC 20052, U.S.A. E-mail: eunheek@gwu.edu

Abstract

Integrating elements from industrial organization economics and the resource-based view—coupled with path dependence as firm resources evolve over time, this paper suggests that deregulation may not always provide greater opportunities for incumbents, and the extent to which incumbents differentiate on the green dimension may be constrained by their prior resources, in particular, capabilities with respect to brown technologies and experiences with green technologies. Using data on U.S. investor-owned electric utilities from 1992 to 2008, this paper finds that deregulation is associated with lower entry into the renewable generation market by incumbents compared to regulation. More capable firms using brown technologies, for example, coal-based generation, are less likely to enter the renewable generation market. Also, incumbents are responsive to actual, not latent, demand for renewable energy. Copyright © 2013 John Wiley & Sons, Ltd.

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