From wood to coal: Directed technical change and the British Industrial Revolution

Author

John C. V. Pezzey, David Stern (sterndavidi@yahoo.com) and Yingying Lu

CAMA Working Papers from  Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We build a directed technical change model of the British Industrial Revolution where one intermediate goods sector uses a fixed renewable energy ("wood") quantity, and another uses coal at a fixed price. With a high enough elasticity of substitution between the two goods in producing final output, an industrial revolution, where over time the coal-using sector grows relative to the wood-using sector and its growth accelerates, is not inevitable. However, greater initial scarcity of wood and/or higher population growth puts the economy on a path to an industrial revolution. The converse slows industrialization, or even prevents it forever.

Keywords: British Industrial Revolution; directed technical change; renewable energy; coal; two-sector model; substitutability; population growth (search for similar items in EconPapers)
JEL-codes: N13 N73 O33 O41 Q43 (search for similar items in EconPapers)
Date: 2017-03
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Persistent link: http://EconPapers.repec.org/RePEc:een:camaaa:2017-26

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