Abstract

https://ssrn.com/abstract=2533977
 
 

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Transition to Clean Technology


Daron Acemoglu


Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Ufuk Akcigit


University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Center for Economic and Policy Research (CEPR)

Douglas Hanley


University of Pittsburgh

William R. Kerr


Harvard University - Entrepreneurial Management Unit

December 3, 2014

Harvard Business School Entrepreneurial Management Working Paper No. 15-045

Abstract:     
We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation. in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model’s quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.

Number of Pages in PDF File: 54

Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy.

JEL Classification: O30, O31, O33, C65.


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Date posted: December 6, 2014  

Suggested Citation

Acemoglu, Daron and Akcigit, Ufuk and Hanley, Douglas and Kerr, William R., Transition to Clean Technology (December 3, 2014). Harvard Business School Entrepreneurial Management Working Paper No. 15-045. Available at SSRN: https://ssrn.com/abstract=2533977 or http://dx.doi.org/10.2139/ssrn.2533977

Contact Information

Daron Acemoglu
Massachusetts Institute of Technology (MIT) - Department of Economics ( email )
50 Memorial Drive
Room E52-380b
Cambridge, MA 02142
United States
617-253-1927 (Phone)
617-253-1330 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Ufuk Akcigit
University of Chicago - Department of Economics ( email )
1126 E. 59th St
Chicago, IL 60637
United States
HOME PAGE: http://www.ufukakcigit.com
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Center for Economic and Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Douglas Hanley
University of Pittsburgh ( email )
Pittsburgh, PA 15260
United States
HOME PAGE: http://doughanley.com
William R. Kerr (Contact Author)
Harvard University - Entrepreneurial Management Unit ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
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