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Vintage capital and the diffusion of clean technologies

  • Theophile Azomahou

    (Maastricht University - univ. Maastricht)

  • Raouf Boucekkine

    ()

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

  • Phu Nguyen-Van

    (BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II)

We develop a general equilibrium vintage capital model with energy-saving technological progress and an explicit energy sector to study the impact of investment subsidies on equilibrium 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. Two polar market structures are considered for the energy market, free entry and natural monopoly. First, it is shown that investment subsidies may induce a larger equilibrium investment into cleaner technologies either under free entry or natural monopoly. However in the latter case, this happens if and only if the average cost is decreasing fast enough. Second, larger diffusion rates do not necessarily mean lower energy consumption at equilibrium, which may explain certain empirical observations.

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Paper provided by HAL in its series Working Papers with number halshs-00599092.

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Date of creation: 08 Jun 2011
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Handle: RePEc:hal:wpaper:halshs-00599092
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00599092/en/
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  1. PEREZ-BARAHONA, Agustin & ZOU, Benteng, . "A comparative study of energy saving technical progress in a vintage capital model," CORE Discussion Papers RP -1841, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. repec:dgr:uvatin:20030019 is not listed on IDEAS
  3. repec:dgr:uvatin:19990031 is not listed on IDEAS
  4. Bjorner, Thomas Bue & Jensen, Henrik Holm, 2002. "Energy taxes, voluntary agreements and investment subsidies--a micro-panel analysis of the effect on Danish industrial companies' energy demand," Resource and Energy Economics, Elsevier, vol. 24(3), pages 229-249, June.
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