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Directed technical change, unilateral actions, and climate change

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  • Hiroaki Sakamoto

Abstract

In this paper, I investigate the implications of policy-induced technological change based on a multi-region variant of the directed technical change model developed by Acemoglu et al. (2012). On top of the pollution externality accompanied by carbon dioxide emission, different regions are connected through a global market where energy-related machine producing firms monopolistically compete with each other. One of the main findings of the analysis is that unilaterally introduced climate policies in developed regions might have only a slight short-term impact at a global level, but later will turn out to be a basis for low-carbon development in developing regions as well as developed regions. The simulation results indicate that an extension of the Kyoto protocol, if appropriately designed, can trigger a long-term shift in energy use at a global level even without active involvement of the United States. Moreover, if the United States decides to join the treaty and a fairly moderate abatement target is agreed upon among the member states, the similar level of long-term environmental consequence as in the universal climate regime can be replicated without explicit participation of developing regions.

Suggested Citation

  • Hiroaki Sakamoto, 2012. "Directed technical change, unilateral actions, and climate change," Discussion papers e-11-007, Graduate School of Economics Project Center, Kyoto University.
  • Handle: RePEc:kue:dpaper:e-11-007
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    References listed on IDEAS

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    1. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    2. Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July.
    3. Eli Berman & Linda T. M. Bui, 2001. "Environmental Regulation And Productivity: Evidence From Oil Refineries," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 498-510, August.
    4. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    5. Popp, David, 2006. "ENTICE-BR: The effects of backstop technology R&D on climate policy models," Energy Economics, Elsevier, vol. 28(2), pages 188-222, March.
    6. Grimaud, André & Lafforgue, Gilles & Magné, Bertrand, 2011. "Climate change mitigation options and directed technical change: A decentralized equilibrium analysis," Resource and Energy Economics, Elsevier, vol. 33(4), pages 938-962.
    7. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
    8. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
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    More about this item

    Keywords

    Climate change; directed technical change; unilateral policy; innovation; Kyoto protocol;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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