Directed Technical Change With Capital-Embodied Technologies: Implications For Climate Policy

Arbeitspapier

We develop a theoretical model of directed technical change in which clean (zero emissions) and dirty (emissions-intensive) technologies are embodied in long-lived capital. We show how obsolescence costs generated by technological embodiment create inertia in a transition to clean growth. Optimal policies involve higher and longer-lasting clean R&D subsidies than when technologies are disembodied. From a low level, emissions taxes are initially increased rapidly, so they are higher in the long run. There is more warming. Introducing spillovers from an exogenous technological frontier representing non-energy-intensive technologies reduces mitigation costs. Optimal taxes and subsidies are lower and there is less warming.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 73.2014

Classification and Topics

• Classification: Wirtschaft ; Technological Change: Choices and Consequences; Diffusion Processes ; Environment and Growth ; Climate; Natural Disasters and Their Management; Global Warming ; Environmental Economics: Technological Innovation ; Environmental Economics: Government Policy
• Subject: Climate Change Mitigation ; Directed Technical Change ; Capital-Embodiment ; Investment-Specific Technological Change ; Obsolescence

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lennox, James A. ; Witajewski, Jan
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/107711
• Last update: 10.03.2025, 11:42 AM CET