Economic Growth, Emission Reduction and the Choice of Energy Technology in a Dynamic-Game Framework

To assess options in energy policy, the relationship between energy technology, economic output and emissions is analyzed in a dynamic-game framework which describes the interaction between players aiming at economic output and emission reduction. The players allocate investment to various energy technologies, differing in costs, economic output and emissions per energy unit. Control variables for each player are the amount of investment and its allocation. Game-theoretic analysis is used to discuss conditions under which players would change behavior and select energy technologies to pursue their objectives more cooperatively. Policy instruments are compared with regard to the different energy paths and the compatibility of economic and environmental objectives.

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