Modeling technological change in economic models of climate change: a survey

The assessment of climate change mitigation policies through economic modeling depends crucially on assumptions under which technological change has been incorporated in the model. Earlier climate-energy-economics modeling attempts heavily relied on the assumption of exogenous technological change. In this case, technological change is a function solely of time. However, such an approach seems insu cient, especially given developments in other elds of economic research that have helped to explain in more detail the process of technological change. A lot of research has been done hence on endogenizing technological change in large-scale models. The purpose of this paper is to summarize these e orts. We describe di erent model types and their treatment of exogenous technological change (autonomous energy e ciency improvements and backstop technologies) and endogenous technological change (including price inducement, learning-by-doing, investments in R & D and directed technical change). We conclude with some open questions and suggestions for future research