Explaining slow diffusion of energy-saving technologies: a vintage model with returns to diversity and learning-by-using

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Abstract

This paper studies the adoption and diffusion of energy-saving technologies in a vintage model. An important characteristic of the model is that vintages are complementary: there are returns to diversity of using a mix of vintages. We analyse how diffusion patterns and adoption behaviour are affected by complementarity and learning-by-using. It is shown that the stronger the complementarity between different vintages and the stronger the learning-by-using, the longer it takes before firms scrap old vintages. We argue that this is a relevant part of the explanation for the observed slow diffusion of energy-saving technologies. Finally, we show that an energy price tax reduces energy consumption, because it speeds up the diffusion of new energy-saving technologies and induces substitution from capital to labour. © 2002 Elsevier Science B.V. All rights reserved.
Original languageEnglish
Pages (from-to)105-126
Number of pages21
JournalResource and Energy Economics
Volume25
Issue number1
DOIs
Publication statusPublished - 2003

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