Arbeitspapier
Carbon Lock-In: The Role of Expectations
We argue that expectations about future energy use affect the transition from fossil fuels to renewable substitutes, because of an interaction between innovation and resource scarcity. The paper presents a model of directed technical change to study this interaction. We find that resource-saving technical change erodes the incentives to implement the substitute. Conversely, the anticipation of the substitute being implemented in the future diminishes the incentives to invest in resource-saving technology. As a result, two dynamic equilibria may arise, one with a transition to the substitute and with low resource efficiency, and one without the substitute and with fast efficiency improvements. Expectations determine which equilibrium arises in the decentralized market equilibrium. If multiple equilibria exist, the transition to the substitute generates higher welfare.
- Sprache
-
Englisch
- Erschienen in
-
Series: Tinbergen Institute Discussion Paper ; No. 14-100/VIII
- Klassifikation
-
Wirtschaft
Innovation; Research and Development; Technological Change; Intellectual Property Rights: General
Exhaustible Resources and Economic Development
Alternative Energy Sources
Environmental Economics: Technological Innovation
- Thema
-
Directed technical change
energy transition
multiple equilibria
- Ereignis
-
Geistige Schöpfung
- (wer)
-
van der Meijden, Gerard
Smulders, Sjak
- Ereignis
-
Veröffentlichung
- (wer)
-
Tinbergen Institute
- (wo)
-
Amsterdam and Rotterdam
- (wann)
-
2014
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- van der Meijden, Gerard
- Smulders, Sjak
- Tinbergen Institute
Entstanden
- 2014
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