Directed technical change, unilateral actions, and climate change

Hiroaki Sakamoto

Discussion papers from Graduate School of Economics Project Center, Kyoto University

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.

Keywords: Climate change; directed technical change; unilateral policy; innovation; Kyoto protocol (search for similar items in EconPapers)
JEL-codes: O31 O33 Q54 Q55 Q58 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:kue:dpaper:e-11-007

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