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Promoting clean technologies under imperfect competition

Author

Listed:
  • AZOMAHOU, Théophile
  • BOUCEKKINE, Raouf

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • NGUYEN-VAN, Phu

Abstract

We develop a general equilibrium multi-sector vintage capital model with energy-saving technological progress and an explicit energy market to study the impact of investment subsidies on investment and output. Energy and capital are assumed to be complementary in the production process. New machines are less energy consuming and scrapping is endogenous. The intermediate inputs sector is modelled à la Dixit-Stiglitz (1977). Two polar market structures are considered for the energy market, free entry and natural monopoly. The impact of imperfect competition on the outcomes of the decentralized equilibria are deeply characterized. We identify an original paradox: adoption subsidies may induce a larger investment into cleaner technologies either under free entry or natural monopoly. However, larger diffusion rates do not necessarily mean lower energy consumption at equilibrium, which may explain certain empirical puzzles.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • AZOMAHOU, Théophile & BOUCEKKINE, Raouf & NGUYEN-VAN, Phu, 2009. "Promoting clean technologies under imperfect competition," LIDAM Discussion Papers CORE 2009011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2009011
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2009.html
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    Cited by:

    1. Hritonenko, Natali & Yatsenko, Yuri, 2012. "Energy substitutability and modernization of energy-consuming technologies," Energy Economics, Elsevier, vol. 34(5), pages 1548-1556.
    2. Hritonenko, Natali & Yatsenko, Yuri, 2010. "Technological innovations, economic renovation, and anticipation effects," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1064-1078, November.
    3. Alejandro Caparrós & Richard E. Just & David Zilberman, 2015. "Dynamic Relative Standards versus Emission Taxes in a Putty-Clay Model," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 277-308.

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    Keywords

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    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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