Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 05/2004: Climate policies and induced technological change: Impacts and timing of technology subsidies
Snorre Kverndokk (), Knut Einar Rosendahl () and Thomas F. Rutherford ()
Additional contact information
Snorre Kverndokk: Ragnar Frisch Centre for Economic Research,, Postal: Gaustadalléen 21, 0349 Oslo, Norway.
Knut Einar Rosendahl: Research Department, Statistics Norway, Postal: P.O. Box 8131 Dep.,, 0033 Oslo, Norway.
Thomas F. Rutherford: Department of Economics, University of Colorado at Boulder,, Postal: Boulder, Colorado, 80309-0256, USA
Abstract: We study the role of technology subsidies in climate policies, using a simple dynamic equilibrium model with learning-by-doing. The optimal subsidy rate of a carbon-free technology is high when the technology is first adopted, but falls significantly over the next decades. However, the efficiency costs of uniform instead of optimal subsidies, may be low if there are introduction or expansion constraints for a new technology. Finally, supporting existing energy technologies only, may lead to technology lock-in, and the impacts of lock-in increase with the learning potential of new technologies as well as the possibilities for early entry and thight carbon constraints.
Keywords: Climate change policies; Computable equilibrium models; Induced technological change; Subsidies; Timing.
34 pages, April 29, 2004
Full text files
Memo-05-2004.pdf
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