Electricity Use of Automation or How to Tax Robots?

Abstract

While automation technologies replace workers in ever more tasks, robots, 3D-printers, and AI require substantial amounts of electricity. How are automation technologies affected by the price of electricity, and how do robot taxes and electricity taxes affect their adoption? To answer these questions, we generalize a standard economic growth model to incorporate automation and electricity use. In addition, we augment the model with electricity taxes and robot taxes and show the mechanisms by which these taxes affect automation. We find that an electricity tax—that is comparatively easy to implement—can serve a similar purpose as a robot tax.