EconStor >
University of Oslo >
Department of Economics, University of Oslo >
Memoranda, Department of Economics, University of Oslo >

Please use this identifier to cite or link to this item:
Title:Climate policies and induced technological change: Which to choose the carrot or the stick? PDF Logo
Authors:Kverndokk, Snorre
Rosendahl, Knut Einar
Rutherford, Thomas F.
Issue Date:2001
Series/Report no.:Memorandum, Department of Economics, University of Oslo 2001,26
Abstract:Policies to reduce emissions of greenhouse gases such as CO2 will affect the rate and pattern of technological change in alternative energy resources and other production processes. Imperfections in markets for non-polluting technologies imply that a decentralised economy does not deliver a socially optimal outcome, and this could justify policy interventions such as subsidies. This paper considers the welfare effects of technology subsidies as part of a carbon abatement policy package. We argue that the presence of spillovers in alternative energy technologies does not necessarily imply that subsidy policies are welfare improving. We illustrate this point in the context of a general equilibrium model with two forms of carbon-free energy, an existing “alternative energy” which is a substitute for carbon-based fuels, and “new vintage energy” which provides a carbon-free replacement for existing energy services. Subsidisation of alternative energy on the grounds of spillover effects can be welfare-worsening if it crowds-out new vintage technologies.
Subjects:Induced technological change
Climate change policies
Policy instruments
Computable general equilibrium models
Document Type:Working Paper
Appears in Collections:Memoranda, Department of Economics, University of Oslo

Files in This Item:
File Description SizeFormat
336927533.pdf234.95 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.