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General Equilibrium Effects of Green Technological Progress

  • Ngo Van Long
  • Frank Staehler

This paper demonstrates that technological progress in production of renewable energy can influence the extraction path of fossil fuels indirectly by a change in the equilibrium interest rate. We show in a simple model that the indirect effect can be so strong that first-period or even aggregate extraction levels rise with technological progress. Cet article démontre que les progrès technologiques dans la production d'énergie renouvelable peut influencer la trajectoire de l'extraction de combustibles fossiles indirectement par un changement dans le taux d'intérêt d'équilibre. Nous montrons dans un modèle simple que l'effet indirect peut être si fort que les niveaux d'extraction augmentent avec le progrès technologique.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2014s-16.

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Length: 11 pages
Date of creation: 01 Feb 2014
Date of revision:
Handle: RePEc:cir:cirwor:2014s-16
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  1. Thomas Eichner & Rüdiger Pethig, 2011. "Carbon Leakage, The Green Paradox, And Perfect Future Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(3), pages 767-805, 08.
  2. van der Ploeg, Frederick & Withagen, Cees, 2012. "Is there really a green paradox?," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 342-363.
  3. Quentin Grafton & Tom Kompas & Ngo Van Long, 2012. "Substitution between bio-fuels and fossil fuels: is there a Green Paradox?," CIRANO Working Papers 2012s-10, CIRANO.
  4. Hoel, Michael, 2011. "The Green Paradox and Greenhouse Gas Reducing Investments," International Review of Environmental and Resource Economics, now publishers, vol. 5(4), pages 353-379, September.
  5. Hoel, Michael, 1978. "Resource extraction, substitute production, and monopoly," Journal of Economic Theory, Elsevier, vol. 19(1), pages 28-37, October.
  6. Hoel, Michael, 1983. "Monopoly resource extractions under the presence of predetermined substitute production," Journal of Economic Theory, Elsevier, vol. 30(1), pages 201-212, June.
  7. Sinn, Hans-Werner, 2008. "Public policies against global warming: A supply side approach," Munich Reprints in Economics 19638, University of Munich, Department of Economics.
  8. Heinz Welsch & Frank Stähler, 1990. "On externalities related to the use of exhaustible resources," Journal of Economics, Springer, vol. 51(2), pages 177-195, June.
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