Carbon lock-in: The role of expectations

G.C. van der Meijden, Sjak Smulders

Research output: Contribution to journalArticleScientificpeer-review

21 Citations (Scopus)


We argue that expectations about future energy use affect the transition from fossil to renewables, because of an interaction between innovation and resource scarcity. The paper presents a model of directed technical change to study this interaction. We find that fossil-saving technical change erodes the incentives to implement renewables. Conversely, the anticipation of a transition to renewables diminishes the incentives to invest in fossil technology. As a result, two equilibria may arise, one with a transition to renewables and with low fossil efficiency, and one without renewables and with high fossil efficiency. Expectations determine which equilibrium arises in equilibrium.
Original languageEnglish
Pages (from-to)1371-1415
Number of pages44
JournalInternational Economic Review
Issue number4
Publication statusPublished - 28 Nov 2017


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