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Modeling Endogenous Technological Change for Climate Policy Analysis

  • Gillingham, Kenneth T.
  • Newell, Richard G.
  • Pizer, William A.

    ()

    (Resources for the Future)

The approach used to model technological change in a climate policy model is a critical determinant of its results. We provide an overview of the different approaches used in the literature, with an emphasis on recent developments regarding endogenous technological change, research and development, and learning. Detailed examination sheds light on the salient features of each approach, including strengths, limitations, and policy implications. Key issues include proper accounting for the opportunity costs of climate-related knowledge generation, treatment of knowledge spillovers and appropriability, and the empirical basis for parameterizing technological relationships. No single approach appears to dominate on all these dimensions, and different approaches may be preferred depending on the purpose of the analysis, be it positive or normative.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-07-14.

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Date of creation: 14 May 2007
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Handle: RePEc:rff:dpaper:dp-07-14
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