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Effect of Feed-In Tariff with Deregulation on Directed Technical Change in the Energy Sector

Minoru Nakada

The B.E. Journal of Macroeconomics, 2022, vol. 22, issue 2, 765-785

Abstract: In this study, we examine how a feed-in tariff (FIT) accompanied with deregulation in the energy sector affects the direction of technical change along the balanced growth path. A final good is composed of resource-saving (such as renewable) energy and traditional resource-intensive energy. The government introduces a FIT scheme for promoting resource-saving energy, while it deregulates the traditional energy sector for efficiency improvement. The implementation of the scheme positively affects directed technical change toward the resource-saving energy technology and economic growth. Meanwhile, the biased technical change leads to an upsurge in the surcharge. Associated deregulation not only accelerates the biased technical change but also drives the surge in the surcharge rate, unless the initial market structure of the traditional energy sector is highly concentrated.

Keywords: feed-in tariff; deregulation; directed technical change (search for similar items in EconPapers)
JEL-codes: O44 Q55 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1515/bejm-2021-0177

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