Induced technological change and the attractiveness of CO abatement policies 2
نویسندگان
چکیده
Ž . This paper investigates the significance of induced technological change ITC for the attractiveness of CO abatement policies. We use analytical and numerical general equilib2 rium models in which technological change results from profit-maximizing investments in R&D. We show that carbon abatement policies have very different impacts on R&D across industries, and do not necessarily raise the economy-wide rate of technological progress. Focusing only on the sectors with positive R&D impacts can lead to substantial underassessment of the GDP costs of CO abatement policies. The presence of ITC implies lower 2 Ž costs of achieving a given abatement target, but it implies higher gross costs costs before . netting out environment-related benefits of a given carbon tax. Gross costs depend importantly on the efficiency of R&D markets prior to the introduction of CO policies. 2 q 1999 Elsevier Science B.V. All rights reserved. JEL classification: O32; H23; D58
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