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Induced Technological Change in a Multi-regional, Multi-sectoral Integrated Assessment Model (WIAGEM): Impact Assessment of Climate Policy Strategies

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Claudia Kemfert

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Abstract

This paper illustrates the representation of induced technological change in the multi- regional, multi-sectoral integrated assessment model WIAGEM. The main aim of this paper is to investigate quantitatively economic impacts of climate policy measures due to induced technological changes that are considered. Improved technological innovations are triggered by increased R&D expenditures that advance energy efficiencies. Model results show that induced technological changes due to increased investment in R&D reduce compliance costs. Although R&D expenditures compete with other investment expenditures, we find that increased R&D expenditures improve energy efficiency that substantially lowers abatement costs. Without the inclusion of induced technological changes, emission targets are primarily reached by production declines, resulting in overall welfare reductions. With the inclusion of induced technological changes, emission mitigations can achieve fewer production drawbacks. Technological spill over effects also lead to improved terms of trade effects.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 435.

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Length: 24 p.
Date of creation: 2004
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Publication status: Published in: Ecological Economics 54 (2005), 2-3, 293-305
Handle: RePEc:diw:diwwpp:dp435

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Related research
Keywords: Induced technological change; Multi-regional applied integrated assessment model; Technological spillover;

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Find related papers by JEL classification:
C6 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming
O3 - Economic Development, Technological Change, and Growth - - Technological Change
Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
D5 - Microeconomics - - General Equilibrium and Disequilibrium

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Carraro, Carlo & Gerlagh, Reyer & Zwaan, Bob van der, 2003. "Endogenous technical change in environmental macroeconomics," Resource and Energy Economics, Elsevier, vol. 25(1), pages 1-10, February. [Downloadable!] (restricted)
  2. Buonanno, Paolo & Carraro, Carlo & Galeotti, Marzio, 2003. "Endogenous induced technical change and the costs of Kyoto," Resource and Energy Economics, Elsevier, vol. 25(1), pages 11-34, February. [Downloadable!] (restricted)
  3. Popp, David C., 2001. "The effect of new technology on energy consumption," Resource and Energy Economics, Elsevier, vol. 23(3), pages 215-239, July. [Downloadable!] (restricted)
  4. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March. [Downloadable!] (restricted)
  5. Dowlatabadi, Hadi, 1998. "Sensitivity of climate change mitigation estimates to assumptions about technical change," Energy Economics, Elsevier, vol. 20(5-6), pages 473-493, December. [Downloadable!] (restricted)
  6. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December. [Downloadable!] (restricted)
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  7. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November. [Downloadable!] (restricted)
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  8. Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July. [Downloadable!] (restricted)
  9. Wayne B. Gray & Ronald J. Shadbegian, 1997. "Environmental Regulation, Investment Timing, and Technology Choice," NBER Working Papers 6036, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Valentina Bosetti & Carlo Carraro & Emanuele Massetti & Massimo Tavoni, 2007. "International Energy R&D Spillovers and the Economics of Greenhouse Gas Atmospheric Stabilization," Working Papers 2007.82, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  2. Nicola Cantore, 2005. "Reconsidering the Environmental Kuznets Curve hypothesis: the trade off between environment and welfare," Working Papers 13, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
  3. Enrica De Cian, 2006. "International Technology Spillovers in Climate-Economy Models: Two Possible Approaches," Working Papers 2006.141, Fondazione Eni Enrico Mattei. [Downloadable!]
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