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How to accelerate green technology diffusion? Directed technological change in the presence of coevolving absorptive capacity

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  • Hötte, Kerstin

Abstract

The time window for effective climate change mitigation is closing. Technological change needs to be accelerated to limit global warming to a manageable level. Path dependence of technological change is one explanation for sluggish diffusion of green technologies. Firms acquire capital that differs by technology type and build up type-specific technological know-how needed to use capital efficiently. Path dependence emerges from cumulative knowledge stocks manifested in the productivity of supplied capital and firms’ capabilities. Increasing returns arise from induced innovation feedbacks and learning by doing. Relatively lower endowments with technological knowledge are a barrier to diffusion for new technologies. This paper shows how the evolution of relative stocks of technological knowledge explains different shapes of diffusion curves. Using an eco-technology extension of the macroeconomic agent-based model Eurace@unibi, it is shown how the effectiveness of different climate policies depends on the type and strength of diffusion barriers. Environmental taxes can outweigh lower productivity and subsidies perform better if lacking capabilities hinder firms to adopt a sufficiently mature technology.

Suggested Citation

  • Hötte, Kerstin, 2020. "How to accelerate green technology diffusion? Directed technological change in the presence of coevolving absorptive capacity," Energy Economics, Elsevier, vol. 85(C).
  • Handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988319303603
    DOI: 10.1016/j.eneco.2019.104565
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    More about this item

    Keywords

    Directed technological change; Technology diffusion; Climate policy; Absorptive capacity; Agent-based model;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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