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Title

Cycles in nonrenewable resource prices with pollution and learning-by-doing

Publication Year

2012

Author(s)
  • Chakravorty, Ujjayant
  • Leach, Andrew
  • Moreaux, Michel
Source
JOURNAL OF ECONOMIC DYNAMICS & CONTROL Volume: 36 Issue: 10 Pages: 1448-1461 Published: 2012
ISSN
0165-1889
Abstract

We study how environmental regulation in the form of a cap on aggregate emissions from a fossil fuel (e.g., coal) interacts with the arrival of a clean substitute (e.g., solar energy). The cost of the substitute is assumed to decrease with cumulative use because of learning-by-doing. We show that optimal energy prices may initially increase because of pollution regulation, but fall due to learning, and rise again because of scarcity of the resource, finally falling after transition to the clean substitute. Thus nonrenewable resource prices may exhibit cyclical behavior even in a purely deterministic setting. (C) 2012 Elsevier B.V. All rights reserved.

Author Keyword(s)
  • Climate change
  • Energy markets
  • Environmental externalities
  • Nonrenewable resources
  • Technological change
KeyWord(s) Plus
  • RESEARCH-AND-DEVELOPMENT
  • TECHNOLOGICAL-CHANGE
  • BACKSTOP TECHNOLOGY
  • OPTIMAL EXTRACTION
  • CLIMATE POLICY
  • FOSSIL-FUELS
  • ECONOMICS
  • INNOVATION
  • DEPLETION
  • ABATEMENT
ESI Discipline(s)
  • Economics & Business
Web of Science Category(ies)
  • Economics
Adress(es)

[Chakravorty, Ujjayant] Tufts Univ, TSE, CESifo, Dept Econ, Medford, MA 02155 USA; [Leach, Andrew] Univ Alberta, Sch Business, Edmonton, AB T6G 2R6, Canada; [Leach, Andrew] CIRANO, Edmonton, AB T6G 2R6, Canada; [Moreaux, Michel] Toulouse Sch Econ, IDEI, LERNA, F-31000 Toulouse, France

Reprint Adress

Chakravorty, U (reprint author), Tufts Univ, TSE, CESifo, Dept Econ, Medford, MA 02155 USA.

Country(ies)
  • Canada
  • France
  • United States
CNRS - Adress(es)

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Accession Number
WOS:000307626900002
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