The Transition to Endogenous Technical Change in Climate-Economy Models: A Technical Overview to the Innovation Modeling Comparison Project

Köhler Jonathan, Michael Grubb, David Popp and Ottmar Edenhofer

The Energy Journal, 2006, vol. 27, issue 1_suppl, 17-56

Abstract: This paper assesses endogenous technical change (ETC) in climate-economy models, using the models in the Innovation Modeling Comparison Project (IMCP) as a representative cross-section. ETC is now a feature of most leading models. Following the new endogenous growth literature and the application of learning curves to the energy sector, there are two main concepts employed: knowledge capital and learning curves. The common insight is that technical change is driven by the development of knowledge capital and its characteristics of being partly non-rival and partly non-excludable. There are various different implementations of ETC. Recursive CGE models face particular difficulties in incorporating ETC and increasing returns. The main limitations of current models are: the lack of uncertainty analysis; the limited representation of the diffusion of technology; and the homogeneous nature of agents in the models including the lack of representation of institutional structures in the innovation process.

Keywords: Endogenous technological change; Climate-economy models; Model comparison; IMCP (search for similar items in EconPapers)
Date: 2006
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Journal Article: The Transition to Endogenous Technical Change in Climate-Economy Models: A Technical Overview to the Innovation Modeling Comparison Project (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:27:y:2006:i:1_suppl:p:17-56

DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI1-2

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