Time: 10:00 am - 11:30 am, May 22th, 2026
Speaker: David Hémous (University of Zurich)
Venue: Zhifuxuan Classroom, Langrun Garden, Peking University
Abstract:
We develop a dynamic model of green technological transition along supply chains, with a unique equilibrium and multiple steady-states. Even with Pigouvian environmental taxation, targeted sectoral subsidies are generally needed to reach the social optimum. A government constrained to small subsidies or below-social-cost carbon prices should target downstream sectors. With strategic complementarity in greenification, subsidies (weakly) raise welfare; under strategic substitutability, subsidizing greenification in a sector whose output mainly feeds dirty downstream production can derail the transition. Calibrating the model to the long-range heavy-duty transport sector, we find that Pigouvian carbon pricing alone is in-sufficient to escape a low-greenification trap.
Speaker:
David Hémous is the UBS Foundation Professor of Economics of Innovation and Entrepreneurship at the University of Zurich. He is a macroeconomist working on economic growth, environmental economics, and international trade. His research explores the effect of technology on income inequality and the role played by innovation in the design of climate policy. His work has been published in the American Economic Review, the Journal of Political Economy, the Review of Economic Studies, or the American Economic Journal: Macroeconomics among others. He is the recipient of an ERC starting grant on Automation and was awarded the European Award for Researchers in Environmental Economics under the Age of Forty in 2022.