The Fossil Episode
We build a two-sector dynamic general equilibrium model with one-sided substitutability between fossil carbon and biocarbon. One shock only, the discovery of the technology to use fossil fuels, leads to a transition from an initial pre-industrial phase to three following phases: a pure fossil carbon phase, a mixed fossil and biocarbon phase and an absorbing biocarbon phase. The increased competition for biocarbon during phase 3 and 4 leads to increasing food prices. We provide closed form expressions for this price increase. Our calibration leads to a price increase of 40% if capital and labor are allowed to move to the biocarbon sector. Otherwise, the price increase is much higher. We also use the model to analyze the consequences of restrictions on using biocarbon as fuel. We show that such restrictions can lead to a substantially slower global warming due to an endogenous slowdown of fossil fuel extraction
Year of publication: |
[2021]
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Authors: | Hassler, John ; Sinn, Hans-Werner |
Publisher: |
[S.l.] : SSRN |
Subject: | Fossile Energie | Fossil fuel | Klimawandel | Climate change | Theorie | Theory | Strukturwandel | Structural change | Ölpreis | Oil price | Bioenergie | Bioenergy | Hotelling-Regel | Hotelling rule | Lebensmittelpreis | Food price |
Saved in:
freely available
Extent: | 1 Online-Ressource (34 p) |
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Series: | CESifo Working Paper Series ; No. 4016 |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 4, 2012 erstellt |
Other identifiers: | 10.2139/ssrn.2188815 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013315828