Working Paper: NBER ID: w23420
Authors: Derek Lemoine
Abstract: Generalizing models of directed technical change, I show that complementarities between innovations and factors of production (here energy resources) can drive transitions away from a dominant sector. In a calibrated numerical implementation, the economy gradually transitions energy supply from coal to gas and then to renewable energy even in the absence of policy. The welfare-maximizing tax on carbon emissions is J-shaped, immediately redirects most research to renewables, and rapidly transitions energy supply directly to renewables. The emission tax is twice as valuable as either the welfare-maximizing research subsidy or the welfare-maximizing mandate to use renewable resources.
Keywords: No keywords provided
JEL Codes: N70; O33; O38; O44; Q43; Q54; Q55; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| emission tax (H23) | research allocation (C90) |
| emission tax (H23) | transition to renewables (Q42) |
| research allocation (C90) | resource use (Q21) |
| elasticity of substitution (D11) | effectiveness of policies (F68) |
| research allocation (C90) | transitions in resource use (P28) |