How constant is constant elasticity of substitution? Endogenous substitution between clean and dirty energy
OPEN ACCESS
Loading...
Author / Creator
Date
2024-05
Publication Type
Journal Article
ETH Bibliography
yes
Citations
Altmetric
OPEN ACCESS
Data
Rights / License
Abstract
The degree of substitutability between clean and dirty energy plays a central role in leading economic analyses of optimal environmental policy. Despite the importance, assuming a constant and exogenous elasticity of substitution has been a dominant theoretical approach. We challenge this assumption by developing a dynamic general equilibrium model with an endogenous elasticity of substitution that interacts with the relative share of clean inputs in the economy. We find strong dynamic feedback effects arising from endogenous substitution capacity that amplifies the impact of directed technical change and accelerates the transition to a green economy.
Permanent link
Publication status
published
External links
Editor
Book title
Journal / series
Journal of Environmental Economics and Management
Volume
125
Pages / Article No.
102982
Publisher
Elsevier
Event
Edition / version
Methods
Geographic location
Date collected
Date created
Subject
Elasticity of substitution; Directed technical change; Climate change
Organisational unit
09762 - Barrage, Lint / Barrage, Lint
02120 - Dep. Management, Technologie und Ökon. / Dep. of Management, Technology, and Ec.
Notes
Funding Info about funding
Related publications and datasets
af7d6783-aa3b-46ac-8879-11acb801b9b6