Modeling the impact of technical change on emissions abatement investments in developing countries
Gallaher, M., & Delhotal, K. (2005). Modeling the impact of technical change on emissions abatement investments in developing countries. In A. N. Link, & F. M. Scherer (Eds.), Essays in Honor of Edwin Mansfield: The Economics of R&D, Innovation, and Technological Change New York,NY: Springer Science+Business Media, Inc..
The cost of greenhouse gas (GHG) mitigation over time depends on both the rate of technical change in leading-edge technologies and the diffusion of knowledge and capabilites throughout international markets. This paper presents a framework developed by the U.S. Environmental Protection Agency (EPA) and RTI International (RTI) for incorporating technical change in non-CO2 GHG mitigation projections over time. An engineering (bottom-up) approach is used to model technical change as a set of price and productivity factors that change over time as a function of technology advances and the location of developing countries relative to the technology efficiency frontier. S-shaped diffusion curves are generated, which demonstrate the maturity of the market for a given technology in a given region. The framework is demonstrated for coal mine methane mitigation technologies in the United States and China, but it is applicable for the full range of technology adoption issues.