series: OCFEB Research Memoranda; RM 0105
Explaining the Energy-Efficiency Paradox. A Vintage Model with Returns to Diversity and Learning-by-Using: A Vintage model with returns to diversity and learning-by-using
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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 modeled as being complementary: there are returns to diversity of using different 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 (seemingly) inferior technologies. We argue that this is a potentially relevant part of the explanation of the energy-efficiency paradox. Furthermore we explore the effects of energy tax policies.
- O33 : Technological Change: Choices and Consequences; Diffusion Processes
- Q43 : Energy and the Macroeconomy
- E22 : Capital; Investment (including Inventories); Capacity
- goods sector