This paper assesses endogenous technical change (ETC) in climate-economy models, using the models in the Innovation Modeling Comparison Project (IMCP) as a representative cross-section. ETC is now a feature of most leading models. Following the new endogenous growth literature and the application of learning curves to the energy sector, there are two main concepts employed: knowledge capital and learning curves. The common insight is that technical change is driven by the development of knowledge capital and its characteristics of being partly non-rival and partly non-excludable. There are various different implementations of ETC. Recursive CGE models face particular difficulties in incorporating ETC and increasing returns. The main limitations of current models are: the lack of uncertainty analysis; the limited representation of the diffusion of technology; and the homogeneous nature of agents in the models including the lack of representation of institutional structures in the innovation process.
AghionP.HowittP. (1998). Endogenous Growth Theory. Cambridge, Massachusetts: MIT Press. AndersonD.WinneS. (2004). “Modelling innovation and threshold effects in climate change mitigation.” Tyndall Centre working paper 59. www.tyndall.ac.uk.
2.
ArchibugieD.MichieJ. (1997). Technology Globalisation and Economic Performance. Cambridge: CUP.
3.
ArgotteL.EppleD. (1990). “Learning curves in manufacturing.” Science247: 920-924.
4.
AzarC.DowlatabadiH. (1999). “A review of technical change in assessment of climate policy.” Annual Review of Energy and the Environment24: 513-44.
5.
BahnO.KypreosS. (2003). “Incorporating different endogenous learning formulations in MERGE.” International Journal of Global Energy Issues. 19(4): 333-358.
6.
BarkerT.KöhlerJ.VillenaM. (2002). ”The Costs of Greenhouse Gas Abatement: A MetaAnalysis of Post-SRES Mitigation Scenarios.” Environmental Economics and Policy Studies 5(2): 135-166.
7.
BarkerT.PanH.KöhlerJ.WarrenR.WinneS. (2006). “Decarbonizing the global economy with induced technological change: scenarios to 2100 using e3mg”, The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
8.
BlundellR.GriffithR.Van ReenenJ., (1995). “Dynamic Count Data Models of Technological Innovation”. Economic Journal, 105(429):333-344.
9.
BosettiV.CarraroC.GaleottiM. (2006). “The Dynamics of Carbon and Energy Intensity in a Model of Endogenous Technical Change.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
10.
BossettiV.DrouetL. (2005). “Accounting for Uncertainty ffecting Technical Change in an Economic Climate Model”, FEE Working paper 147:2005.
11.
BrunnermeierS.B.CohenM.A. (2003). “Determinants of environmental innovation in US manufacturing industries.” Journal of Environmental Economics and Management45: 278-293.
12.
BuonannoP.CarraroC.CastelnuovoE.GaleottiM. (2000). “Efficiency and Equity of Emission Trading with Endogenous Environmental Technical Change”, in CarraroC. (ed.), Efficiency and Equity of Climate Change Policy. Dordrecht: Kluwer Academic Publishers.
13.
ClarkeL.E.WeyantJ.P. (2002). “Modeling Induced Technical Change: An Overview”, in GrublerA.NakićenovićN.NordhausW.D. (eds.), Technological Change and the Environment, Washington D.C.; Resources for the Future Press, 320-363.
14.
CoeD.T.HelpmanE. (1995). “International R&D Spillovers.” European Economic eview39(5): 859-87.
15.
CrassousR.HourcadeJ.-C.SassiO. (2006). “Endogenous Structural Change and Climate Targets in the exploration and extraction sector of fossil fuels” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
16.
DavidP.A. (1985). “Clio and the economics of QWERTY.” American Economic Re-view75(2): 332337.
17.
DuttonJ.M.ThomasA. (1984). “Treating progress functions as a managerial opportunity.” Academy of Management Review1(9): 235-247.
18.
EatonJ.KortumS. (1994). “International Patenting and Technology Diffusion.” NBER Working Paper no. 4931.
19.
EdenhoferO.LessmanK.KemfertC.GrubbM.KöhlerJ. (2006a). “Induced Technological-Change: Exploring its Implications for the Economics of Atmospheric Stabilization.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmosperic Stabilization.
20.
EdenhoferO.LessmannK.BauerN. (2006b). “Mitigation Strategies and Costs of Climate Protection: The Effects of ETC in the Hybrid Model MIND.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
21.
EvansP. (1996). “Using Cross-Country Variances to Evaluate growth theories.” Journal of Economic Dynamics and Control20: 1027-1049.
22.
FreemanC.SoeteL. (1997). The Economics of Industrial Innovation, 3rd Ed, London: Pinter.
23.
GerlaghR.. (2006). “ITC in a Global Growth-Climate Model with CCS: The Value of Induced Technical Change for Climate Stabilization.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
24.
GoolsbeeAustan (1998). “Does government R&D policy mainly benefit scientists and engineers?” American Economic Review88(2), 299-302.
25.
GoulderL.H. (2004). “Induced Technological Change and Climate Policy.” Prepared for the Pew Center on Global Climate Change. Pew Center: Arlington, VA.
26.
GrilichesZ. (1992). “The search for R&D spillovers.” Scandinavian Journal of Economics, 94(sup-plement) 29-47.
27.
GritsevskyiA.NakićenovićN. (2000). “Modelling uncertainty of induced technological change.” Energy Policy.28: 907-921.
28.
GrossmanGene M. and E. Helpman (1994). “Endogenous Innovation in the Theory of Growth.” Journal of Economic Perspectives.8(1): 23-44.
29.
GrubbM.KöhlerJ.AndersonD. (2002). “Induced technical change in energy and environmental modelling: analytical approached and policy implications.” Annual Revue of Energy and the Environment.27: 271-308.
30.
GrubbM. &D. Ulph (2002). “Energy, the Environment and Innovation.” Oxford Review of Economic Policy.18(1): 92-106.
31.
Grubler A., N. Nakićenović and D.G. Victor (1999a). “Modelling technological change: Implications for the global environment.” Annual Review of Energy and the Environment24:545-69.
32.
GrublerA.NakićenovićN.VictorD.G. (1999b). “Dynamics of Energy Technologies and Global Change.” Energy Policy27: 247-80.
33.
HallBronwyn (1995). “The Private and Social Returns to Research and Development,” in Technology, R&D, and the Economy, Bruce Smith and Claude Barfield, eds., Brookings, 140-183.
34.
HatchN.W.MoweryD.C. (1998). “Process innovation and learning by doing in semiconductor manufacturing.” Management Science44(11): 1461-1477.
35.
HedenusF.AzarC.LindgrenK. (2006). “Induced technological change in a limited foresight optimization model.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
36.
HopeC. (forthcoming). “The marginal impact of CO2 from PAGE2002: An integrated assessment model incorporating the IPCC’s five reasons for concern.” Integrated Assessment.
37.
HowellsJ. (2005). The Management of Innovation and Technology. Sage: London.
38.
IEA (2000). Experience Curves for Energy Technology Policy, Paris, OECD.
39.
IPCC (2001). Climate Change 2001: The Scientific Basis, Cambridge: CUP.
40.
JaberM.Y.GuiffridaA.L.(2004). “Learning curves for processes generating defects requiring reworks.” European Journal Of Operational Research159 (3): 663-672.
41.
JaffeAdam B. (1986). “Technological Opportunity and Spillover of R&D: Evidence from Firms’ Patents, Profits, and Market Value.” American Economic Review76, 984-1001.
42.
JaffeA.B.NewellR.G.StavinsR. (2000). “Technological Change and the Environment.” Resources for the Future Discussion paper 00-47. Washington D.C.: RFF.
43.
JaffeA.B.NewellR.G.StavinsR.N. (2003). “Technological Change and the Environment.” K.-G. Mäler and VincentJ.R. (eds.), Handbook of Environmental Economics (Vol.1), Amsterdam: North-Holland.
44.
JaffeA.B.PalmerK. (1997). “Environmental regulation and innovation: a panel data study.” Review of Economics and Statistics79:610-19.
45.
JonesC.I. (1995). “R&D-Based Models of Economic Growth.” Journal of Political Economy103: 759-84.
46.
JonesC.I.WilliamsJ.C. (1998). “Measuring the social return to R&D.” Quarterly Journal of Economics113:1119-1135.
47.
Jorgenson D. (1995). Productivity. Cambridge, Mass.:MIT Press.
48.
JoskowP. L.RoseN. L.. (1985). “The Effects of Technology Change, Experience, and Environmental Regulation on the Construction Cost of Coal-burning Generating Units.” Rand Journal of Economics16(1):1-26.
49.
JungingerM.FaaijA.TurkenburgW.C..(2005). “Global experience curves for wind farms.” Energy Policy33 (2): 133-150.
50.
Keller W. (2004). “International technology diffusion.” Journal of Economic Literature42(3): 752782.
51.
KemfertC. (2005). “Induced technological change in a multi-regional, multi-sectoral, integrated assessment model (WIAGEM): Impact assessment of climate policy strategies.” Ecological Economics54(2-3): 293-305.
52.
LichtenbergFrank R. (1986). “Energy Prices and Induced Innovation,” Research Policy15(2): 67-75.
53.
LichtenbergFrank R. (1987).“Changing Market Opportunities and the Structure of R&D Investment: The Case of Energy,” Energy Economics9(3): 154-8.
54.
LöschelA. (2002). “Technological Change in Economic Models of Environmental Policy: A Survey”, Ecological Economics. 43: 105-126.
55.
MankiwN.G.RomerP.WeilD.N. (1992). “A contribution to the Empirics of Economic Growth.” Quarterly Journal of Economics107(2): 407-437.
56.
ManneA.S.RichelsR.G. (2004). “The Impact of Learn-By-Doing on the Timing and Costs of CO2 Abatement”, Energy Economics 26: 603-620.
57.
MansfieldEdwin (1996). “Microeconomic Policy and Technological Change,” in Technology and Growth: Conference Proceedings, FuhrerJeffrey C.JaneSneddon Little eds., Federal Reserve Bank of Boston, 183-200.
58.
MansfieldEdwin (1977). “Social and Private Rates of Return from Industrial Innovations.” Quarterly Journal of Economics91: 221-240.
59.
McDonaldA.SchrattenholzerL. (2001). “Learning rates for energy technologies.” Energy Policy.29: 255-261.
60.
MasuiT.HanaokaT.HikitaS.KainumaM. (2006). “Assessment of CO2 Reductions and Economic Impacts Considering Energy-Saving Investments.” The Energy JournalSpecial Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
61.
MontgomeryW. David AnneE. Smith (Forthcoming). “Price, Quantity, and Technology Strategies for Climate Change Policy” in Human-Induced Climate Change: An Interdisciplinary Assessment, Cambridge: Cambridge University Press.
62.
NewellR.G.JaffeA.B.StavinsR.N.(1999). “The induced innovation hypothesis and energy-saving technological change.” Quarterly Journal of Economics114: 941-975.
63.
NickellS. J. (1996). “Competition and Corporate Performance”, Journal of Political Economy, 104(4):724-746.
64.
NordhausW.D. (2002). “Modeling Induced Innovation in Climate-Change Policy”, in GrublerA.NakićenovićN.NordhausW.D. (eds.), Technological Change and the Environment, Washington D.C.; Resources for the Future Press, 182-209.
65.
PakesAriel (1985). “On Patents, R&D, and the Stock Market Rate of Return,” Journal of Political Economy93, 390-409.
66.
PoppD. (2002). “Induced innovation and energy prices.” American Economic Review, 92:160-180.
67.
PoppD. (2004). “ENTICE: Endogenous Technological Change in the DICE Model of Global Warming,” Journal of Environmental Economics and Management48(1): 742-768.
68.
PoppD. (2006). “Comparison of Climate Policies in the ENTICE_BR Model.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
69.
RaoS.KeppoI.RiahiK. (2006). “Importance of Technological Change and Spillovers in LongTerm Climate Policy.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
70.
Rapping L. (1965). “Learning and World War II production functions.” Review of Economics and Statistics47:81-86.
71.
RomerP. (1986). “Increasing returns and long-run growth.” Journal of Political Economy94(5): 1002-37.
72.
RomerP. (1990). “Endogenous technological change.” Journal of Political Economy98 (5): S71-102.
73.
RosenbergN. (1976). Perspectives on Technology. Cambridge, Cambridge University Press.
74.
SanoF.AkimotoK.HommaT.TomodaT. (2006). “Analysis of technological portfolios for CO2 stabilizations and effects of technological changes.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization.
Schumpeter J. A. (1939). Business Cycles: A Theoretical, Historical and Statistical Analysis of the Capitalist process. 2 vols. New York, McGraw-Hill.
77.
ScottM.F. (1991). A New View of Economic Growth. Oxford: OUP.
78.
Sijm J.P.M. (2004). Induced Technological Change and Spillovers in Climate Policy Modelling: An Assessment. ECN-C--04-073 Energy Research Centre of the Netherlands (ECN).
79.
SolowR. (1957). “Technical Change and the Aggregate Production Function.” Review of Economics and Statistics39(3): 312-320.
80.
Temple J. (1999). “The new growth evidence.” Journal of Economic Literature37 (1): 112-156.
81.
Thornton R.A. and P. Thompson (2001). “Learning from experience and learning from others: An exploration of learning and spillovers in wartime shipbuilding.” American Economic Review91 (5): 1350-1368.
82.
van der Zwaan, B.C.C., R. Gerlagh, G. Klaassen, and L. Schrattenholzer (2002). “Endogenous Technological Change in Climate Change Modelling”, Energy Economics 24: 1-19.
83.
Weyant J.P. (2004). “Introduction and Overview”. Energy Economics 26: 501-515.
84.
WeyantJohn P. and Thomas Olavson (1999). “Issues in Modelling Induced Technological Change in Energy, Environment, and Climate Policy.” Environmental Modelling and Assessment4(2&3): 67-85.
85.
WrightT.P. (1936). “Factors Affecting the Cost of Airplanes.” Journal of the Aeronautical Sciences, 3: 122-128.
86.
YoungA. (1995). “The Tyranny of Numbers: Confronting the Statistical realities of the East Asian growth Experience.” Quarterly Journal of Economics110:641-680.
87.
ZimmermanM. B. (1982). “Learning and the Commercialization of New Energy Technologies: The Case of Nuclear Power.” Bell Journal of Economics.13(2): 297-310.
