IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v68y2017is1p17-32.html
   My bibliography  Save this article

Induced technological change and energy efficiency improvements

Author

Listed:
  • Witajewski-Baltvilks, Jan
  • Verdolini, Elena
  • Tavoni, Massimo

Abstract

We present a theoretical and empirical model which (1) shows that the demand for energy is shifted down by innovations in energy intensive sectors and (2) highlights the drivers of innovative activity in these sectors. The theoretical model and the empirical analysis of patent and energy data indicate that the level of innovative activity is determined by energy expenditure as well as international and inter-temporal spillovers. The solution of the theoretical model along the balanced growth path suggests that in general equilibrium the level of innovative activity depends on the growth rate of energy generation cost. The model predicts also that a level increase in the cost of energy does not alter the long-run energy share of income. Finally, we show that our results can be used to calibrate Integrated Assessment Models to project energy efficiency growth.

Suggested Citation

  • Witajewski-Baltvilks, Jan & Verdolini, Elena & Tavoni, Massimo, 2017. "Induced technological change and energy efficiency improvements," Energy Economics, Elsevier, vol. 68(S1), pages 17-32.
    • Handle: RePEc:eee:eneeco:v:68:y:2017:i:s1:p:17-32
    DOI: 10.1016/j.eneco.2017.10.032
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988317303730
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2017.10.032?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Valentina Bosetti & Carlo Carraro & Romain Duval & Alessandra Sgobbi & Massimo Tavoni, 2009. "The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the WITCH Model," OECD Economics Department Working Papers 664, OECD Publishing.
    2. Lionel, Nesta & Vona, Francesco & Nicolli, Francesco, 2012. "Environmental Policies, Product Market Regulation and Innovation in Renewable Energy," Climate Change and Sustainable Development 143120, Fondazione Eni Enrico Mattei (FEEM).
    3. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    4. Witajewski-Baltvilks, Jan & Verdolini, Elena & Tavoni, Massimo, 2015. "Bending the learning curve," Energy Economics, Elsevier, vol. 52(S1), pages 86-99.
    5. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    6. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    7. Nesta, Lionel & Vona, Francesco & Nicolli, Francesco, 2014. "Environmental policies, competition and innovation in renewable energy," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 396-411.
    8. Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July.
    9. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
    10. Dasgupta, Partha & Maskin, Eric, 1987. "The Simple Economics of Research Portfolios," Economic Journal, Royal Economic Society, vol. 97(387), pages 581-595, September.
    11. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    12. repec:fth:harver:1473 is not listed on IDEAS
    13. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    14. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 287-343, National Bureau of Economic Research, Inc.
    15. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High Are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86, National Bureau of Economic Research, Inc.
    16. Mancusi, Maria Luisa, 2008. "International spillovers and absorptive capacity: A cross-country cross-sector analysis based on patents and citations," Journal of International Economics, Elsevier, vol. 76(2), pages 155-165, December.
    17. Daron Acemoglu, 2007. "Equilibrium Bias of Technology," Econometrica, Econometric Society, vol. 75(5), pages 1371-1409, September.
    18. Elmar Kriegler & John Weyant & Geoffrey Blanford & Volker Krey & Leon Clarke & Jae Edmonds & Allen Fawcett & Gunnar Luderer & Keywan Riahi & Richard Richels & Steven Rose & Massimo Tavoni & Detlef Vuu, 2014. "The role of technology for achieving climate policy objectives: overview of the EMF 27 study on global technology and climate policy strategies," Climatic Change, Springer, vol. 123(3), pages 353-367, April.
    19. Michael E. Porter & Scott Stern, 2000. "Measuring the "Ideas" Production Function: Evidence from International Patent Output," NBER Working Papers 7891, National Bureau of Economic Research, Inc.
    20. Hassler, John & Olovsson, Conny, 2012. "Energy-Saving Technical Change," CEPR Discussion Papers 9177, C.E.P.R. Discussion Papers.
    21. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    22. Otto, Vincent M. & Löschel, Andreas & Reilly, John, 2008. "Directed technical change and differentiation of climate policy," Energy Economics, Elsevier, vol. 30(6), pages 2855-2878, November.
    23. Popp, David C., 2001. "The effect of new technology on energy consumption," Resource and Energy Economics, Elsevier, vol. 23(3), pages 215-239, July.
    24. André, Francisco J. & Smulders, Sjak, 2014. "Fueling growth when oil peaks: Directed technological change and the limits to efficiency," European Economic Review, Elsevier, vol. 69(C), pages 18-39.
    25. Daron Acemoglu & Philippe Aghion & David Hémous, 2014. "The environment and directed technical change in a North–South model," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 30(3), pages 513-530.
    26. Daron Acemoglu, 2015. "Localised and Biased Technologies: Atkinson and Stiglitz's New View, Induced Innovations, and Directed Technological Change," Economic Journal, Royal Economic Society, vol. 0(583), pages 443-463, March.
    27. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1055-1089.
    28. Elena Verdolini & Marzio Galeotti, 2009. "At Home and Abroad: An Empirical Analysis of Innovation and Diffusion in Energy-Efficient Technologies," Working Papers 2009.123, Fondazione Eni Enrico Mattei.
    29. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    30. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
    31. Giovanni Peri, 2005. "Determinants of Knowledge Flows and Their Effect on Innovation," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 308-322, May.
    32. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
    33. Richard Schmalensee & Thomas M. Stoker & Ruth A. Judson, 1998. "World Carbon Dioxide Emissions: 1950-2050," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 15-27, February.
    34. Douglas Hanley & Daron Acemoglu & Ufuk Akcigit & William Kerr, 2014. "Transition to Clean Technology," Working Paper 534, Department of Economics, University of Pittsburgh, revised Jan 2014.
    35. Sorrell, Steve, 2009. "Jevons' Paradox revisited: The evidence for backfire from improved energy efficiency," Energy Policy, Elsevier, vol. 37(4), pages 1456-1469, April.
    36. Noailly, Joëlle & Smeets, Roger, 2013. "Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data," Climate Change and Sustainable Development 148921, Fondazione Eni Enrico Mattei (FEEM).
    37. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    38. Joëlle Noailly & Roger Smeets, 2013. "Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data," CPB Discussion Paper 237, CPB Netherlands Bureau for Economic Policy Analysis.
    39. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    40. Verdolini, Elena & Galeotti, Marzio, 2011. "At home and abroad: An empirical analysis of innovation and diffusion in energy technologies," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 119-134, March.
    41. Valentina Bosetti & Emanuele Massetti & Massimo Tavoni, 2007. "The WITCH Model. Structure, Baseline, Solutions," Working Papers 2007.10, Fondazione Eni Enrico Mattei.
    42. Elena Verdolini & Valentina Bosetti, 2017. "Environmental Policy and the International Diffusion of Cleaner Energy Technologies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(3), pages 497-536, March.
    43. Webster, Mort & Paltsev, Sergey & Reilly, John, 2008. "Autonomous efficiency improvement or income elasticity of energy demand: Does it matter?," Energy Economics, Elsevier, vol. 30(6), pages 2785-2798, November.
    44. Goulder, Lawrence H. & Schneider, Stephen H., 1999. "Induced technological change and the attractiveness of CO2 abatement policies," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 211-253, August.
    45. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    46. Joëlle Noailly & Roger Smeets, 2013. "Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data," Working Papers 2013.34, Fondazione Eni Enrico Mattei.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chris Belmert Milindi & Roula Inglesi-Lotz, 2023. "Impact of technological progress on carbon emissions in different country income groups," Energy & Environment, , vol. 34(5), pages 1348-1382, August.
    2. Wu, Xiuqin & Zhao, Jinsong & Zhang, Dayong & Lee, Wen-Chieh & Yu, Chin-Hsien, 2022. "Resource misallocation and the development of hydropower industry," Applied Energy, Elsevier, vol. 306(PA).
    3. Colmenares, Gloria & Löschel, Andreas & Madlener, Reinhard, 2019. "The rebound effect and its representation in energy and climate models," CAWM Discussion Papers 106, University of Münster, Münster Center for Economic Policy (MEP).
    4. Antosiewicz, Marek & Witajewski-Baltvilks, Jan, 2021. "Short- and long-run dynamics of energy demand," Energy Economics, Elsevier, vol. 103(C).
    5. Wang, Haotian & Hao, Liang & Wang, Weizheng & Chen, Xingyu, 2023. "Natural resources lineage, high technology exports and economic performance: RCEP economies perspective of human capital and energy resources efficiency," Resources Policy, Elsevier, vol. 87(PA).
    6. Galeotti, Marzio & Salini, Silvia & Verdolini, Elena, 2020. "Measuring environmental policy stringency: Approaches, validity, and impact on environmental innovation and energy efficiency," Energy Policy, Elsevier, vol. 136(C).
    7. Kerner, Philip & Kalthaus, Martin & Wendler, Tobias, 2023. "Economic growth and the use of natural resources: assessing the moderating role of institutions," Energy Economics, Elsevier, vol. 126(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan Witajewski-Baltvilks & Elena Verdolini & Massimo Tavoni, 2015. "Directed Technological Change and Energy Efficiency Improvements," Working Papers 2015.78, Fondazione Eni Enrico Mattei.
    2. Gregory Casey, 2024. "Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 192-228.
    3. Dechezlepretre, Antoine & Martin, Ralf & Mohnen, Myra, 2014. "Knowledge spillovers from clean and dirty technologies," LSE Research Online Documents on Economics 60501, London School of Economics and Political Science, LSE Library.
    4. Acemoglu, Daron & Rafey, Will, 2023. "Mirage on the horizon: Geoengineering and carbon taxation without commitment," Journal of Public Economics, Elsevier, vol. 219(C).
    5. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    6. Antosiewicz, Marek & Witajewski-Baltvilks, Jan, 2021. "Short- and long-run dynamics of energy demand," Energy Economics, Elsevier, vol. 103(C).
    7. Lazkano, Itziar & Nøstbakken, Linda & Pelli, Martino, 2017. "From fossil fuels to renewables: The role of electricity storage," European Economic Review, Elsevier, vol. 99(C), pages 113-129.
    8. Naqvi, Asjad & Stockhammer, Engelbert, 2018. "Directed Technological Change in a Post-Keynesian Ecological Macromodel," Ecological Economics, Elsevier, vol. 154(C), pages 168-188.
    9. Yang, Jun & Yang, Dingjian & Cheng, Jixin, 2024. "The non-rivalry of data, directed technical change and the environment: A theoretical study incorporating data as a production factor," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 417-448.
    10. Conti, C. & Mancusi, M.L. & Sanna-Randaccio, F. & Sestini, R. & Verdolini, E., 2018. "Transition towards a green economy in Europe: Innovation and knowledge integration in the renewable energy sector," Research Policy, Elsevier, vol. 47(10), pages 1996-2009.
    11. Carraro, Carlo & De Cian, Enrica & Nicita, Lea & Massetti, Emanuele & Verdolini, Elena, 2010. "Environmental Policy and Technical Change: A Survey," International Review of Environmental and Resource Economics, now publishers, vol. 4(2), pages 163-219, October.
    12. Herman, Kyle S. & Xiang, Jun, 2019. "Induced innovation in clean energy technologies from foreign environmental policy stringency?," Technological Forecasting and Social Change, Elsevier, vol. 147(C), pages 198-207.
    13. Antoine Dechezleprêtre & David Popp, 2015. "Fiscal and Regulatory Instruments for Clean Technology Development in the European Union," CESifo Working Paper Series 5361, CESifo.
    14. Hille, Erik & Althammer, Wilhelm & Diederich, Henning, 2020. "Environmental regulation and innovation in renewable energy technologies: Does the policy instrument matter?," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    15. Bretschger, Lucas & Lechthaler, Filippo & Rausch, Sebastian & Zhang, Lin, 2017. "Knowledge diffusion, endogenous growth, and the costs of global climate policy," European Economic Review, Elsevier, vol. 93(C), pages 47-72.
    16. Lazkano, Itziar & Pham, Linh, 2016. "Do Fossil fuel Taxes Promote Innovation in Renewable Electricity Generation?," Discussion Paper Series in Economics 16/2016, Norwegian School of Economics, Department of Economics.
    17. Antung Anthony Liu & Hiroaki Yamagami, 2018. "Environmental Policy in the Presence of Induced Technological Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(1), pages 279-299, September.
    18. Barbieri, Nicolò & Marzucchi, Alberto & Rizzo, Ugo, 2023. "Green technologies, interdependencies, and policy," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    19. Feng, Siyu & Lazkano, Itziar, 2022. "Innovation trends in electricity storage: What drives global innovation?," Energy Policy, Elsevier, vol. 167(C).
    20. Jan Witajewski-Baltvilks, 2018. "Green Growth and Taste Heterogeneity," IBS Working Papers 07/2018, Instytut Badan Strukturalnych.

    More about this item

    Keywords

    Energy efficiency; Directed technological change; Induced innovations; Patents;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:68:y:2017:i:s1:p:17-32. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.