IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Innovation and Climate Change Policy

  • Joshua S. Gans

This paper examines whether climate change policies will induce innovation in environmentally friendly technologies. The model demonstrates that a tighter emissions cap will reduce the scale of fossil fuel usage and that this will diminish incentives to improve fossil fuel efficiencies. In addition, such policies may stimulate the relative demand for innovations that improve the efficiency of alternative energy but carbon scarcity may diminish innovation incentives overall. Only for technologies that directly abate carbon pollution will there be an unambiguously positive impact on innovation. These results have implications for climate change targets and the design of climate change policy. (JEL O31, Q54, Q55, Q58)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 4 (2012)
Issue (Month): 4 (November)
Pages: 125-45

in new window

Handle: RePEc:aea:aejpol:v:4:y:2012:i:4:p:125-45
Note: DOI: 10.1257/pol.4.4.125
Contact details of provider: Web page:

More information through EDIRC

Order Information: Web:

References listed on IDEAS
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.:

as in new window
  1. Arrow Kenneth J. & Cohen Linda & David Paul A. & Hahn Robert W. & Kolstad Charles D. & Lane Lee & Montgomery W. David & Nelson Richard R. & Noll Roger G. & Smith Anne E., 2009. "A Statement on the Appropriate Role for Research and Development in Climate Policy," The Economists' Voice, De Gruyter, vol. 6(1), pages 1-4, February.
  2. Smulders, Sjak & de Nooij, Michiel, 2003. "The impact of energy conservation on technology and economic growth," Resource and Energy Economics, Elsevier, vol. 25(1), pages 59-79, February.
  3. Acemoglu, Daron, 2009. "When Does Labor Scarcity Encourage Innovation?," CEPR Discussion Papers 7247, C.E.P.R. Discussion Papers.
  4. Sue Wing, Ian, 2006. "Representing induced technological change in models for climate policy analysis," Energy Economics, Elsevier, vol. 28(5-6), pages 539-562, November.
  5. Pizer, William A. & Popp, David, 2007. "Endogenizing Technological Change: Matching Empirical Evidence to Modeling Needs," Discussion Papers dp-07-11, Resources For the Future.
  6. Antoine Dechezlepr�tre & Matthieu Glachant & Ivan Haščič & Nick Johnstone & Yann Ménière, 2011. "Invention and Transfer of Climate Change--Mitigation Technologies: A Global Analysis," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 109-130, Winter.
  7. Gillingham, Kenneth T. & Newell, Richard G. & Pizer, William A., 2007. "Modeling Endogenous Technological Change for Climate Policy Analysis," Discussion Papers dp-07-14, Resources For the Future.
  8. Goulder, Lawrence H. & Mathai, Koshy, 2000. "Optimal CO2 Abatement in the Presence of Induced Technological Change," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 1-38, January.
  9. van Zon, Adriaan & Yetkiner, I. Hakan, 2003. "An endogenous growth model with embodied energy-saving technical change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 81-103, February.
  10. Lea Nicita & Carlo Carraro & Emanuele Massetti, 2009. "How Does Climate Policy Affect Technical Change? An Analysis of the Direction and Pace of Technical Progress in a Climate-Economy Model," Working Papers 2009.8, Fondazione Eni Enrico Mattei.
  11. Antoine Dechezlepretre & Matthieu Glachant & Ivan Hascic & Nick Johnstone & Yann Meniere, 2010. "Invention and transfer of climate change mitigation technologies on a global scale: a study drawing on patent data," LSE Research Online Documents on Economics 37590, London School of Economics and Political Science, LSE Library.
  12. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
  13. Gans, Joshua S, 1996. "Comparative Statics Made Simple: An Introduction to Recent Advances," Australian Economic Papers, Wiley Blackwell, vol. 35(66), pages 81-93, June.
  14. Reyer Gerlagh & Bob van der Zwaan, 2006. "Options and Instruments for a Deep Cut in CO2 Emissions: Carbon Dioxide Capture or Renewables, Taxes or Subsidies?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 25-48.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:4:y:2012:i:4:p:125-45. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)

or (Michael P. Albert)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.