An Agent-Based Model of Endogenous Technological Change -- An Extension to the Grubler-Gritsevskyi Model

Based on earlier, pioneering work done at IIASA, this paper presents a model of endogenous technological change under the three potential most important "stylized facts": increasing returns to adoption, uncertainty, and heterogeneous agents following diverse technology development and adoption strategies. As an intermediary step towards the final, long-term research objective of developing a multi-agent model, this paper deals with two heterogeneous agents, a risk-taking one and a risk-aversion one. Interactions between the two agents include trade on resource and good, and technological spillover ("free-riding" and technology trade). With the two heterogeneous agents, we run optimization to minimize their aggregated costs to find out what rational behaviors are under different assumptions if the two agents are somehow cooperative. The global optimal solutions of the two-agent model are of Pareto optimality in the sense that none of the two could be made better off without the other being made worse off. The simulations show how agent heterogeneity - different risk attitudes and sizes, trade between agents and technological spillover effect influence the technological change process. Finally this paper plots and analyzes emission paths as results of different technological change process.

VIEW CONTENT