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Substitution Between Clean And Dirty Energy With Biased Technical Change

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  • Ara Jo

Abstract

The elasticity of substitution between clean and dirty energy lies at the center of leading economic analyses of climate policy. Despite the importance, empirical assessments of this key parameter remain scarce. This article estimates the clean‐dirty elasticity of substitution using data on French manufacturing firms. Using the elasticity estimates, I then measure the bias in technical change at the firm level and find that technical change was largely biased toward dirty energy, despite a recent shift toward clean technologies. Finally, I recover the aggregate elasticity that combines substitution within firms and reallocation across firms from the micro elasticity estimates.

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  • Ara Jo, 2025. "Substitution Between Clean And Dirty Energy With Biased Technical Change," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 66(2), pages 883-902, May.
    • Handle: RePEc:wly:iecrev:v:66:y:2025:i:2:p:883-902
    DOI: 10.1111/iere.12743
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