Input-Displacing Technologies in GreenREFORM

Abstract

This note presents a modelling strategy for endogenizing input-displacing technologies in a constant elasticity of substitution (CES) production function framework. Input-displacing technologies allow firms to change their dependency on some inputs at the expense of others by making capital investments. The general CES-based theory presented in this paper can be employed using a technology catalog which describes the available technologies that firms can choose between.