Directed Technical Change and the British Industrial Revolution

73 Pages Posted: 3 Apr 2017 Last revised: 10 May 2017

See all articles by John C.V. Pezzey

John C.V. Pezzey

Australian National University

David I. Stern

Australian National University (ANU) - Crawford School of Public Policy

Yingying Lu

Shanghai University - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 25, 2017

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

JEL Classification: N13, N73, O33, O41, Q43

Suggested Citation

Pezzey, John C. V. and Stern, David I. and Lu, Yingying, Directed Technical Change and the British Industrial Revolution (March 25, 2017). CAMA Working Paper No. 26/2017 , Available at SSRN: https://ssrn.com/abstract=2943773 or http://dx.doi.org/10.2139/ssrn.2943773

John C. V. Pezzey

Australian National University ( email )

Canberra, Australian Capital Territory
Australia

David I. Stern (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

Yingying Lu

Shanghai University - School of Economics ( email )

China

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