TY - JOUR
T1 - Climate Policy, Uncertainty, and the Role of Technological Innovation
AU - Fischer, Carolyn
AU - Sterner, Thomas
PY - 2012/3
Y1 - 2012/3
N2 - We study how uncertainty about climate change severity affects the relative benefits of early abatement and a portfolio of research and development (R&D) in lowering future abatement costs. Optimal early abatement depends on the curvature of the marginal benefit and marginal abatement cost (MAC) functions and how the uncertain parameter affects marginal benefits. R&D in a particular technology depends on whether uncertainty increases early abatement; whether investment lowers marginal costs for that technology; whether R&D lowers the slope of that technology's MAC function; and the shape of that technology's MAC function. We illustrate, focusing on the role of backstop technologies.
AB - We study how uncertainty about climate change severity affects the relative benefits of early abatement and a portfolio of research and development (R&D) in lowering future abatement costs. Optimal early abatement depends on the curvature of the marginal benefit and marginal abatement cost (MAC) functions and how the uncertain parameter affects marginal benefits. R&D in a particular technology depends on whether uncertainty increases early abatement; whether investment lowers marginal costs for that technology; whether R&D lowers the slope of that technology's MAC function; and the shape of that technology's MAC function. We illustrate, focusing on the role of backstop technologies.
UR - http://www.scopus.com/inward/record.url?scp=84858980086&partnerID=8YFLogxK
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U2 - 10.1111/j.1467-9779.2011.01543.x
DO - 10.1111/j.1467-9779.2011.01543.x
M3 - Article
AN - SCOPUS:84858980086
SN - 1097-3923
VL - 14
SP - 285
EP - 309
JO - Journal of Public Economic Theory
JF - Journal of Public Economic Theory
IS - 2
ER -