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Learning by Doing with Constrained Growth Rates: An Application to Energy Technology Policy

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  • Karsten Neuhoff

Abstract

Learning by doing methodology attributes cost reductions of a technology to cumulative investment and experience. This paper argues that in addition market growth rates must also be considered. Historically growth rates have been limited in most sectors, thus allowing for feedback in the learning process. When market growth is below the ‘optimal’ rate, the marginal value of additional investment could be a multiple of the direct learning benefit. Analytic and numeric models quantify this impact - emphasizing the need for tailored technology policy in addition to carbon pricing. Implications for the modeling of endogenous technological change are discussed. Isoard, S. and A. Soria (1997).“Learning curves and returns to scale dynamics: Evidence from the emerging renewable energy technologies.†IPTS Working Paper Series 97/05.

Suggested Citation

  • Karsten Neuhoff, 2008. "Learning by Doing with Constrained Growth Rates: An Application to Energy Technology Policy," The Energy Journal, , vol. 29(2_suppl), pages 165-183, December.
    • Handle: RePEc:sae:enejou:v:29:y:2008:i:2_suppl:p:165-183
    DOI: 10.5547/ISSN0195-6574-EJ-Vol29-NoSI2-9
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    References listed on IDEAS

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    1. Rasmussen, Tobias N., 2001. "CO2 abatement policy with learning-by-doing in renewable energy," Resource and Energy Economics, Elsevier, vol. 23(4), pages 297-325, October.
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    3. Nikolaos Kouvaritakis & Antonio Soria & Stephane Isoard, 2000. "Modelling energy technology dynamics: methodology for adaptive expectations models with learning by doing and learning by searching," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 14(1/2/3/4), pages 104-115.
    4. Karsten Neuhoff, 2005. "Large-Scale Deployment of Renewables for Electricity Generation," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(1), pages 88-110, Spring.
    5. C. Harmon, 2000. "Experience Curves of Photovoltaic Technology," Working Papers ir00014, International Institute for Applied Systems Analysis.
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    7. Marvin B. Lieberman, 1984. "The Learning Curve and Pricing in the Chemical Processing Industries," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 213-228, Summer.
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    2. Wand, Robert & Leuthold, Florian, 2011. "Feed-in tariffs for photovoltaics: Learning by doing in Germany?," Applied Energy, Elsevier, vol. 88(12), pages 4387-4399.
    3. Lehmann, Paul, 2013. "Supplementing an emissions tax by a feed-in tariff for renewable electricity to address learning spillovers," Energy Policy, Elsevier, vol. 61(C), pages 635-641.
    4. Green, Richard & Léautier, Thomas-Olivier, 2015. "Do costs fall faster than revenues? Dynamics of renewables entry into electricity markets," TSE Working Papers 15-591, Toulouse School of Economics (TSE).
    5. Rai, Varun & Victor, David G. & Thurber, Mark C., 2010. "Carbon capture and storage at scale: Lessons from the growth of analogous energy technologies," Energy Policy, Elsevier, vol. 38(8), pages 4089-4098, August.
    6. Felix Groba & Barbara Breitschopf, 2013. "Impact of Renewable Energy Policy and Use on Innovation: A Literature Review," Discussion Papers of DIW Berlin 1318, DIW Berlin, German Institute for Economic Research.
    7. Maria Rosario Garzón Sampedro & Carlos Sanchez Gonzalez, 2016. "Spanish photovoltaic learning curve," International Journal of Low-Carbon Technologies, Oxford University Press, vol. 11(2), pages 177-183.
    8. Sato, Misato & Rafaty, Ryan & Calel, Raphael & Grubb, Michael, 2022. "Allocation, allocation, allocation! The political economy of the development of the European Union Emissions Trading System," LSE Research Online Documents on Economics 115431, London School of Economics and Political Science, LSE Library.
    9. Newbery, David, 2018. "Evaluating the case for supporting renewable electricity," Energy Policy, Elsevier, vol. 120(C), pages 684-696.

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    Keywords

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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