Modeling endogenous technological change for climate policy analysis
The approach used to model technological change in a climate policy model is a critical determinant of its results in terms of the time path of CO2 prices and costs required to achieve various emission reduction goals. We provide an overview of the different approaches used in the literature, with an emphasis on recent developments regarding endogenous technological change, research and development, and learning. Detailed examination sheds light on the salient features of each approach, including strengths, limitations, and policy implications. Key issues include proper accounting for the opportunity costs of climate-related knowledge generation, treatment of knowledge spillovers and appropriability, and the empirical basis for parameterizing technological relationships. No single approach appears to dominate on all these dimensions, and different approaches may be preferred depending on the purpose of the analysis, be it positive or normative. © 2008 Elsevier B.V. All rights reserved.
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- 3802 Econometrics
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1402 Applied Economics
- 0913 Mechanical Engineering
- 0906 Electrical and Electronic Engineering
Citation
Published In
DOI
ISSN
Publication Date
Volume
Issue
Start / End Page
Related Subject Headings
- Energy
- 3802 Econometrics
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1402 Applied Economics
- 0913 Mechanical Engineering
- 0906 Electrical and Electronic Engineering