Modeling technological change in economic models of climate change: A survey

Andreas Löschel and Michael Schymura

No 13-007, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The assessment of climate change mitigation policies through economic modeling depends crucially on assumptions under which technological change has been incorporated in the model. Earlier climate-energy-economics modeling attempts heavily relied on the assumption of exogenous technological change. In this case, technological change is a function solely of time. However, such an approach seems insufficient, especially given developments in other fields of economic research that have helped to explain in more detail the process of technological change. A lot of research has been done hence on endogenizing technological change in large-scale models. The purpose of this paper is to summarize these efforts. We describe different model types and their treatment of exogenous technological change (autonomous energy efficiency improvements and backstop technologies) and endogenous technological change (including price inducement, learning-by-doing, investments in R & D and directed technical change). We conclude with some open questions and suggestions for future research.

Keywords: Exogenous Technical Change; Endogenous Technological Change; Price inducement; Learning-by-doing; Directed Technical Change; Modeling (search for similar items in EconPapers)
JEL-codes: C50 C68 O30 Q25 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ene, nep-env and nep-knm
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:13007

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