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International diffusion of energy-saving technologies has received considerable attention in recent energy and climate economics studies. As a helpful methodological complement to the existing large-scale CGE/IAM–based modelling for energy and climate policy studies, this paper contributes to a transparent analytical model for an economically intuitive exposition on the fundamental mechanism of international technology diffusion for energy technological growth. We first develop an efficiency-improving vertical innovation model where energy technological progress is specified as an improvement in primary energy use efficiency. Then a variety-expanding horizontal innovation model is presented where energy technological progress is described as an expansion of energy technology variety. We show that in both models there is a cross-country convergence in the growth rate of energy technology in a long-run balanced growth path, but the absolute levels of energy technology tend to diverge due to cross-country differences in indigenous innovation efficiencies and knowledge absorptive capacities. An economy with a stronger capacity of absorbing foreign knowledge diffusion and undertaking indigenous research tends to have a higher level of energy technology.
Zhang, ZhongXiang and Jin, Wei, "On the Mechanism of International Technology Diffusion for Energy Technological Progress" (March 24, 2015). Fondazione Eni Enrico Mattei Working Papers. Paper 1024.