We employ a general purpose technology model with endogenous stochastic growth to simulate the effects of different energy policy schemes. A Research and Development (R&D) sector produces endogenous growth by developing radical and incremental technologies. These innovations result in blueprints for intermediate goods, which require raw capital and either carbon-based or noncarbon- based fuels. A carbon tax therefore affects not only the final production sector but also the R&D sector by making the development of non-carbon-based technologies more attractive. Due to path dependencies and possible lock-in situations, economic policy can have a significant long-term impact on the energy structure of the economy. We examine the effects of different carbon policies on growth and environmental quality.We find that an anti-carbon policy may reduce growth initially, but in the long run there is a strong potential for a “double dividend” due to faster growth and reduced pollution. Key words: general purpose technology, carbon tax, R&D, growth, carbon fuel consumption
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Zon, A.v., Kronenberg, T. (2007). General Purpose Technologies and Energy Policy. In: Bretschger, L., Smulders, S. (eds) Sustainable Resource Use and Economic Dynamics. The Economics Of Non-Market Goods And Resources, vol 10. Springer, Dordrecht. https://doi.org/10.1007/978-1-4020-6293-3_5
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