Dynamics of Switching from Polluting Resources to Green Technologies

Volume: 5 Number: 4 December 1, 2015
  • Supratim Das Gupta
EN

Dynamics of Switching from Polluting Resources to Green Technologies

Abstract

We have total energy produced by a firm using a non-renewable resource and a perfect substitute backstop. The average cost of the backstop is significantly higher relative to the non-renewable resource initially; average backstop costs are modeled to fall with investments in knowledge. Investments in knowledge are thought to bring about more efficient techniques to use alternative energies (better technical know-how for wind, solar) reducing their average costs. The knowledge stock is modeled as an impure public good such that an individual firm only partially benefits from its own knowledge accumulation. We find a firm in equilibrium invests less in the backstop relative to the social planner and that the planner solution also leads to faster exhaustion of the depletable resource. Introducing ow pollution, we find the time of switch to the backstop in the planner solution depends on the relative magnitudes of the average pollution cost and the average cost of the backstop. An increase in the pollution cost implies slower extraction of the exhaustible resource and a later switch (compared to the case without pollution); however for a very high pollution cost, the extraction rate rises and switch to the backstop is made sooner leaving some of the exhaustible resource in the ground. We solve both the models explicitly and use sophisticated numerical techniques in Mathematica.

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Primary Language

English

Subjects

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Journal Section

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Authors

Supratim Das Gupta This is me

Publication Date

December 1, 2015

Submission Date

December 1, 2015

Acceptance Date

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Published in Issue

Year 2015 Volume: 5 Number: 4

APA
Gupta, S. D. (2015). Dynamics of Switching from Polluting Resources to Green Technologies. International Journal of Energy Economics and Policy, 5(4), 1109-1124. https://izlik.org/JA57XT77BE
AMA
1.Gupta SD. Dynamics of Switching from Polluting Resources to Green Technologies. IJEEP. 2015;5(4):1109-1124. https://izlik.org/JA57XT77BE
Chicago
Gupta, Supratim Das. 2015. “Dynamics of Switching from Polluting Resources to Green Technologies”. International Journal of Energy Economics and Policy 5 (4): 1109-24. https://izlik.org/JA57XT77BE.
EndNote
Gupta SD (December 1, 2015) Dynamics of Switching from Polluting Resources to Green Technologies. International Journal of Energy Economics and Policy 5 4 1109–1124.
IEEE
[1]S. D. Gupta, “Dynamics of Switching from Polluting Resources to Green Technologies”, IJEEP, vol. 5, no. 4, pp. 1109–1124, Dec. 2015, [Online]. Available: https://izlik.org/JA57XT77BE
ISNAD
Gupta, Supratim Das. “Dynamics of Switching from Polluting Resources to Green Technologies”. International Journal of Energy Economics and Policy 5/4 (December 1, 2015): 1109-1124. https://izlik.org/JA57XT77BE.
JAMA
1.Gupta SD. Dynamics of Switching from Polluting Resources to Green Technologies. IJEEP. 2015;5:1109–1124.
MLA
Gupta, Supratim Das. “Dynamics of Switching from Polluting Resources to Green Technologies”. International Journal of Energy Economics and Policy, vol. 5, no. 4, Dec. 2015, pp. 1109-24, https://izlik.org/JA57XT77BE.
Vancouver
1.Supratim Das Gupta. Dynamics of Switching from Polluting Resources to Green Technologies. IJEEP [Internet]. 2015 Dec. 1;5(4):1109-24. Available from: https://izlik.org/JA57XT77BE