Transition to Clean Technology

Daron  Acemoglu; Ufuk  Akcigit; Douglas  Hanley; William R. Kerr

Article | Journal of Political Economy

Transition to Clean Technology

by Daron Acemoglu, Ufuk Akcigit, Douglas Hanley and William R. Kerr

Abstract

We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation, in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model's quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.

Keywords: Technological Innovation; Entrepreneurship; Environmental Sustainability; Green Technology Industry;

Format: Print

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Citation:

Acemoglu, Daron, Ufuk Akcigit, Douglas Hanley, and William R. Kerr. "Transition to Clean Technology." Special Issue on Climate Change and the Economy. Journal of Political Economy 124, no. 2 (February 2016): 52–104.

Networking and the giving and receiving of advice outside of one’s own firm are important features of entrepreneurship and innovation. We study how immigrants and natives utilize the potential networking opportunities provided by CIC, formerly known as the Cambridge Innovation Center. CIC is widely considered the center of the Boston entrepreneurial ecosystem. We surveyed 1,334 people working at CIC in three locations spread across the Boston area and CIC’s first expansion facility in St. Louis, Missouri. Survey responses show that immigrants value networking capabilities in CIC more than natives, and the networks developed by immigrants at CIC tend to be larger. Immigrants report substantially greater rates of giving and receiving advice than natives for six surveyed factors: business operations, venture financing, technology, suppliers, people to recruit, and customers. The structure and composition of CIC floors has only a modest influence on these immigrant versus native differences.

This primer provides an overview of the implications of automation technology based on state-of-the-art "Artificial Intelligence" (AI) in the late 2010s: including the trends leading to the surge in AI, applications of AI categorized by the type of work performed, limitations of the technology, discussion about AI adoption, and key concerns the technology brought about.

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Transition to Clean Technology

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