Chapter 9

Optimal CO2 Abatement in thePresence of Induced TechnologicalChange

Lawrence H. Goulder and Koshy Mathai

9.1   Introduction

Over the past decade considerable efforts have been directed toward evaluating alternative policies to reduce the atmospheric accumulation of greenhouse gases, particularly carbon dioxide (CO2). Initial assessments tended to disregard interconnections between technological change and CO2-abatement policies, treating the rate of technological progress as autonomous—that is, unrelated to policy changes or associated changes in relative prices. Recently, however, several researchers have emphasized that CO2 policies and the rate of technological change are connected: to the extent that public policies affect the ...

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