We build a directed technical change model where one intermediate goods sector uses a fixed quantity of biomass energy (“wood”) and another uses coal at a fixed price, matching stylized facts for the British Industrial Revolution. Unlike previous research, we do not assume that the level or...

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...