Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • Article
  • Journal of Political Economy

Transition to Clean Technology

By: Daron Acemoglu, Ufuk Akcigit, Douglas Hanley and William R. Kerr
  • Format:Print
ShareBar

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

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.
  • Find it at Harvard
  • Read Now

About The Author

William R. Kerr

Entrepreneurial Management
→More Publications

More from the Authors

    • June 2022
    • Faculty Research

    Can Goodr Fight Food Insecurity at Scale?

    By: Daniel Isenberg and William R. Kerr
    • June 2022
    • Faculty Research

    Katie Couric Media: Landing the First Client

    By: N. Louis Shipley, William R. Kerr and Paige Boehmcke
    • May 2022
    • Faculty Research

    RacingThePlanet’s 20-Year Marathon

    By: Daniel Isenberg and William Kerr
More from the Authors
  • Can Goodr Fight Food Insecurity at Scale? By: Daniel Isenberg and William R. Kerr
  • Katie Couric Media: Landing the First Client By: N. Louis Shipley, William R. Kerr and Paige Boehmcke
  • RacingThePlanet’s 20-Year Marathon By: Daniel Isenberg and William Kerr
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College