The synthesis of bottom - up and top - down approaches to climate policy modeling : Electric power technologies and the cost of limiting US CO 2 emissions
نویسنده
چکیده
In the US, the bulk of CO2 abatement induced by carbon taxes comes from electric power. This paper incorporates technology detail into the electricity sector of a computable general equilibrium model of the US economy to characterize electric power’s technological margins of adjustment to carbon taxes and to elucidate their general equilibrium effects. Compared to the top-down production function representation of the electricity sector, the technology-rich hybrid specification produces less abatement at a higher welfare cost, suggesting that bottom-up models do not necessarily generate lower costs of abatement than top-down models. This result is shown to be sensitive to the elasticity with which technologies’ generating capacities adjust to relative prices. r 2005 Elsevier Ltd. All rights reserved. JEL Classification: C680; Q400; Q540
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