TY  - JOUR
AU  - Popp,David
TI  - ENTICE-BR: The Effects of Backstop Technology R&D on Climate Policy Models
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10285
PY  - 2004
Y2  - February 2004
UR  - http://www.nber.org/papers/w10285
L1  - http://www.nber.org/papers/w10285.pdf
N1  - Author contact info:
David Popp
Associate Professor of Public Administration
Syracuse University
The Maxwell School
426 Eggers Hall
Syracuse, NY 13244-1020
Tel: 315/443-2482
Fax: 315/443-1081
E-Mail: dcpopp@maxwell.syr.edu
AB  - Recent attempts to endogenize technology in climate policy models have produced mixed results. Models including alternative technologies find large gains from induced technological change. However, technological progress in these models comes through learning-by-doing, which ignores the potential opportunity costs of technological change. Models using R&D spending as the driver of technological change address this. However, these models typically include only a single representative energy technology, substitution across technologies is not possible. This paper addresses these shortcomings by including policy-induced energy R&D in a model with a backstop energy technology. I show that, while induced technological change is important, larger welfare gains come from simply adding an alternative technology to the model. As in models with a single technology, opportunity costs of research limit the role induced innovation can play. Moreover, since the backstop technology improves welfare even without climate policy, accurate policy analysis depends on a carefully constructed baseline simulation.
ER  -