Should We Give Up after Solyndra? Optimal Technology R&D Portfolios under Uncertainty
Mort Webster,
Karen Fisher-Vanden,
David Popp and
Nidhi Santen
Journal of the Association of Environmental and Resource Economists, 2017, vol. 4, issue S1, S123 - S151
Abstract:
Climate change and other environmental challenges require the development of new energy technologies with lower emissions. In the near term, R&D investments, either by the government or the private sector, can reduce the costs of these lower-emitting technologies. However, the returns to R&D are uncertain, and there are many potential technologies that may emerge to play an important role in the future energy mix. In this paper, we address the problem of allocating scarce R&D resources across technologies when uncertainties exist. We develop a multistage stochastic dynamic programming version of an integrated assessment model of the climate and economy that represents endogenous technological change through R&D decisions for two substitutable noncarbon backstop technologies. We demonstrate that near-term R&D investment in the higher cost technology is justified and that the optimal R&D investment in the higher cost technology increases with both higher variance and higher skewness in the distribution of returns to R&D.
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://dx.doi.org/10.1086/691995 (application/pdf)
http://dx.doi.org/10.1086/691995 (text/html)
Access to the online full text or PDF requires a subscription.
Related works:
Working Paper: Should We Give Up After Solyndra? Optimal Technology R&D Portfolios under Uncertainty (2015) 
Working Paper: Should We Give Up After Solyndra? Optimal Technology R&D Portfolios under Uncertainty (2015) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:ucp:jaerec:doi:10.1086/691995
Access Statistics for this article
More articles in Journal of the Association of Environmental and Resource Economists from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().