Energy biased technical change: A CGE analysis

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.reseneeco.2006.03.004 Byline: Vincent M. Otto (a)(b), Andreas Loschel (c), Rob Dellink (a) Keywords: Computable general-equilibrium models; Endogenous technical change; Energy; Environment Abstract: This paper studies energy bias in technical change. For this purpose, we develop a computable general-equilibrium model that builds on endogenous growth models. The model explicitly captures links between energy, the rate and direction of technical change, and the economy. We show the importance of feedback in technical change, substitution possibilities between final goods, and general-equilibrium effects for energy bias in technical change. If the feedback effect is strong, or the substitution elasticity large, or both, our model tends to a corner solution in which only technologies are developed that are appropriate for production of non-energy intensive goods. Author Affiliation: (a) Environmental Economics and Natural Resources Group, Wageningen University, Wageningen, The Netherlands (b) Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, Building E40-410, 77 Massachusetts Ave, Cambridge, MA 02138, USA (c) Institute for Prospective Technological Studies (IPTS), DG Joint Research Centre, European Commission, Seville, Spain Article History: Received 11 May 2005; Revised 24 March 2006; Accepted 30 March 2006