Modeling endogenous learning and imperfect competition effects in climate change economics

Viguier L, Barreto L, Haurie A, Kypreos S, & Rafaj P (2006). Modeling endogenous learning and imperfect competition effects in climate change economics. Climatic Change 79 (1): 121-141. DOI:10.1007/s10584-006-9070-1.

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Abstract

In this two-part paper we evaluate the effect of "endogenizing" technological learning and strategic behavior of agents in economic models used to assess climate change policies. In the first part we show the potential impact of R&D policies or demonstration and deployment (D&D) program in the context of stringent stabilization scenarios. In the second part we show how game-theoretic methods can be implemented in climate change economic models to take into account three types of strategic interactions: (i) the market power of the countries benefiting from very low abatement costs on international markets for CO2 emissions, (ii) the strategic behavior of governments in the domestic allocation of CO2 emissions quotas, and (iii) the non-cooperative behavior of countries and regions in the burden sharing of CO2 concentration stabiliztion. The two topics of endogenous learning and game-theoretic approach to economic modeling are two manifestations of the need to take into account the strategic behavior of agents in he evaluation of climate change policies. In the first case an R&D policy or a demonstration and deployment (D&D) program are put in place in order to attain a cost reduction through the learning effect; in the second case the agents (countries) reply optimally to the actions decided by the other agents by exploiting their strategic advantages. Simulations base on integrated assessment models illustrate the approaches. These studies have been conducted under the Swiss NCCR-Climate program.

Item Type: Article
Uncontrolled Keywords: Endogenous technological learning; Strategic behavior; Climate policy; Emissions trading; Economic models; Dynamic games
Research Programs: Environmentally Compatible Energy Strategies (ECS)
Bibliographic Reference: Climatic Change; 79(1-2):121-141 (November 2006)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 02:19
Last Modified: 18 Feb 2016 16:21
URI: http://pure.iiasa.ac.at/7878

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