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| Author: | Peretto, P.F. |
| Title: | Energy taxes and endogenous technological change |
| Journal: | Journal of Environmental Economics and Management
2009 : MAY, VOL. 57:3, p. 269-283 |
| Index terms: | energy taxation growth technological change environment total factor productivity endogenous variables |
| Language: | eng |
| Abstract: | This article analyses the effects of a tax on energy use in a growth model where market structure is endogenous and jointly determined with the rate of technological change. The tax has no effect on the steady-state growth rate because this economy does not exhibit the scale effect. There may exist a hump-shaped relation between the energy tax and welfare under the plausible assumption that energy demand is inelastic. This shape results from the fact that the reallocation of resources from energy production to manufacturing triggers a temporary acceleration of TFP growth. The tax raises welfare despite the fact that it lowers consumption in the short run if endogenous technological change raises consumption sufficiently fast and by a sufficient amount in the long run. |
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