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Induced technical change and the cost of climate policy

This paper investigates the potential for a carbon tax to induce R&D, and for the consequent induced technical change (ITC) to lower the macroeconomic cost of abating carbon emissions. ITC is modelled within a general equilibrium simulation of the U.S. economy by the effects of emissions restrictions on the level and composition of aggregate R&D, the accumulation of the stock of knowledge, and the industry-level reallocation and substitution of intangible services derived therefrom. Contrary to other authors, I find that ITC's impact is large, positive and dominated by the latter "substitution effect," which mitigates most of the deadweight loss of the tax. / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/). / This research was supported by the Offce of Science (BER), U.S. Department of Energy, Grant No. DE-FG02-02ER63484, and by funding from the MIT Joint Program on the Science and Policy of Global Change, which is supported by a consortium of government, industry and foundation sponsors.

Identiferoai:union.ndltd.org:MIT/oai:dspace.mit.edu:1721.1/3648
Date09 1900
CreatorsSue Wing, Ian.
Source SetsM.I.T. Theses and Dissertation
LanguageEnglish
Detected LanguageEnglish
Format740056 bytes, application/pdf
Relation;Report no. 102

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