Skip to main content
×
Home
    • Aa
    • Aa

TECHNOLOGICAL CHANGE DURING THE ENERGY TRANSITION

  • Gerard van der Meijden (a1) and Sjak Smulders (a2)
Abstract

The energy transition from fossil fuels to alternative energy sources has important consequences for technological change and resource extraction. We examine these consequences by incorporating a nonrenewable resource and an alternative energy source in a market economy model of endogenous growth through expanding varieties. During the energy transition, technological progress is nonmonotonic over time: It declines initially, starts increasing when the economy approaches the regime shift, and jumps down once the resource stock is exhausted. A moment of peak-oil does no longer necessarily occur, and simultaneous use of the resource and the alternative energy source will take place if the return to innovation becomes too low. Subsidies to research and development (R&D) and to renewables production speed up the energy transition, whereas a tax on fossil fuels postpones the switch to renewable energy.

Copyright
Corresponding author
Address correspondence to: Gerard van der Meijden, Department of Spatial Economics, Vrije Universiteit Amsterdam, De Boelelaan 1105, 1081 HV, Amsterdam, The Netherlands; e-mail: g.c.vander.meijden@vu.nl.
Footnotes
Hide All

We would like to thank Reyer Gerlagh, Jenny Ligthart, Rick van der Ploeg, Hiroaki Sakamoto, Ralph Winter, Cees Withagen, Aart de Zeeuw, and conference participants in Paris, Ascona, Prague, and Venice for helpful comments. We gratefully acknowledge financial support from FP7-IDEAS-ERC Grant No. 269788.

Footnotes
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

J. B. Ang and J. B. Madsen (2015) What drives ideas production across the world? Macroeconomic Dynamics 19, 79115.

E. Barbier (1999) Endogenous growth and natural resource scarcity. Environmental & Resource Economics 14 (1), 5174.

H. Benchekroun and C. Withagen (2011) The optimal depletion of exhaustible resources: A complete characterization. Resource and Energy Economics 33 (3), 612636.

L. Bretschger and S. Smulders (2012) Sustainability and substitution of exhaustible natural resources: How structural change affects long-term R&D-investments. Journal of Economic Dynamics and Control 36 (4), 536549.

U. Chakravorty , A. Leach , and M. Moreaux (2012) Cycles in nonrenewable resource prices with pollution and learning-by-doing. Journal of Economic Dynamics and Control 36 (10), 14481461.

X. Chen (2017) Biased technical change, scale, and factor substitution in U.S. manufacturing industries. Macroeconomic Dynamics 21 (2), 488514.

P. Dasgupta and G. Heal (1974) The optimal depletion of exhaustible resources. Review of Economic Studies 41, 328.

P. Dasgupta and J. Stiglitz (1981) Resource depletion under technological uncertainty. Econometrica 49 (1), 85104.

M. Hoel (1978) Resource extraction, substitute production, and monopoly. Journal of Economic Theory 19 (1), 2837.

M. I. Kamien and N. L. Schwartz (1978) Optimal exhaustible resource depletion with endogenous technical change. Review of Economic Studies 45 (1), 179196.

M. J. Koetse , H. L. de Groot , and R. J. Florax (2008) Capital-energy substitution and shifts in factor demand: A meta-analysis. Energy Economics 30 (5), 22362251.

W. Roeger (1995) Can imperfect competition explain the difference between primal and dual productivity measures? Estimates for U.S. manufacturing. Journal of Political Economy 103 (2), 316–30.

P. M. Romer (1990) Endogenous technological change. Journal of Political Economy 98 (5), S71–102.

C. Scholz and G. Ziemes (1999) Exhaustible resources, monopolistic competition, and endogenous growth. Environmental & Resource Economics 13 (2), 169185.

H.-W. Sinn (2008) Public policies against global warming: A supply side approach. International Tax and Public Finance 15 (4), 360394.

R. M. Solow (1974b) Intergenerational equity and exhaustible resources. Review of Economic Studies 41, 2945.

J. Stiglitz (1974a) Growth with exhaustible natural resources: Efficient and optimal growth paths. Review of Economic Studies 41, 123137.

J. E. Stiglitz (1974b) Growth with exhaustible natural resources: The competitive economy. Review of Economic Studies 41, 139152.

J. E. Stiglitz and P. Dasgupta (1982) Market structure and resource depletion: A contribution to the theory of intertemporal monopolistic competition. Journal of Economic Theory 28 (1), 128164.

O. Tahvonen and S. Salo (2001) Economic growth and transitions between renewable and nonrenewable energy resources. European Economic Review 45 (8), 13791398.

T. Trimborn , K.-J. Koch , and T. M. Steger (2008) Multidimensional transitional dynamics: A simple numerical procedure. Macroeconomic Dynamics 12 (03), 301319.

Y. Tsur and A. Zemel (2003) Optimal transition to backstop substitutes for nonrenewable resources. Journal of Economic Dynamics and Control 27 (4), 551572.

Y. Tsur and A. Zemel (2005) Scarcity, growth and R&D. Journal of Environmental Economics and Management 49 (3), 484499.

Y. Tsur and A. Zemel (2011) On the dynamics of competing energy sources. Automatica 47 (7), 13571365.

S. Valente (2011) Endogenous growth, backstop technology adoption, and optimal jumps. Macroeconomic Dynamics 15 (03), 293325.

F. Van der Ploeg and C. Withagen (2012a) Is there really a green paradox? Journal of Environmental Economics and Management 64 (3), 342363.

F. Van der Ploeg and C. Withagen (2012b) Too much coal, too little oil. Journal of Public Economics 96 (1), 6277.

E. Van der Werf (2008) Production functions for climate policy modeling: An empirical analysis. Energy Economics 30 (6), 29642979.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords:

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 13 *
Loading metrics...

Abstract views

Total abstract views: 35 *
Loading metrics...

* Views captured on Cambridge Core between 15th June 2017 - 27th June 2017. This data will be updated every 24 hours.