Imperfect resource substitution and optimal transition to clean technologies

N. Baris Vardar ()
Additional contact information
N. Baris Vardar: Paris School of Economics

No 2013072, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Non-renewable and renewable resources are imperfect substitutes due to technical and geographical constraints. What is the role of imperfect substitution on the optimal transition path to the clean technologies? We address this question by characterizing the optimal growth path and resource use of an economy. We show that the economy initially starts with using the non-renewable and renewable resources simultaneously and gradually increases the share of renewable. The outcome can be either (i) the economy switches to a backstop at a certain date or (ii) the initial regime lasts forever. The results show that the economy converges to a steady state even if the backstop is too costly and a green, zero-carbon economy is the optimal final state in any case. We also present some simulation results to illustrate the shapes of the optimal paths. This analysis allows us to discuss the policy implications and question the existence of the Green Paradox.

Keywords: imperfect substitution; optimal transition; non-renewable resource; renewable resource; backstop; simultaneous use; switching; Green Paradox (search for similar items in EconPapers)
JEL-codes: Q20 Q30 Q42 Q43 (search for similar items in EconPapers)
Date: 2013-12-31
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://sites.uclouvain.be/core/publications/coredp/coredp2013.html (application/pdf)

Related works:
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:cor:louvco:2013072

Access Statistics for this paper

More papers in LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Alain GILLIS ().