Figure 8.33: Effects of an Upward Shift in the Adoption Dynamics Curve
Figure 8.33 provides a visual representation of the effects of an upward shift in the Adoption Dynamics Curve (ADC). The figure demonstrates how such a shift moves the carbon-intensive equilibrium to a new, less carbon-intensive point (B') and simultaneously reduces the gap to the tipping point (T'). This narrowing of the distance implies an increased likelihood that a random positive shock could push the market beyond the tipping point.
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Introduction to Macroeconomics Course
Ch.8 Economic dynamics: Financial and environmental crises - The Economy 2.0 Macroeconomics @ CORE Econ
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Figure 8.33: Effects of an Upward Shift in the Adoption Dynamics Curve
Consider a market for vehicles where the relationship between the current share of electric vehicles (EVs) and the share in the next period follows an S-shaped curve. Now, suppose a series of events—such as significant improvements in battery technology and a strong cultural shift favoring sustainability—causes the share of EVs in the next period to be consistently higher for any given level of current EV ownership. What are the two most likely consequences of this change on the market's long-term trajectory?
Evaluating EV Adoption Policies
Analyzing Market Shifts in Technology Adoption
Impact of Subsidies on Technology Adoption
Consider a market where the adoption of a new technology is represented by an S-shaped curve, plotting next period's adoption share against the current share. If factors like lower costs cause this curve to shift upwards, the market becomes more stable at its initial, low-adoption equilibrium point.