Endogenous Innovation Redux: How Irene Gets Us Ready for the Next One
Optimists of the world, here is a Wall Street Journal article for you. One person's pain and suffering is some firm's future market niche. After all, demand creates supply. If an entrepreneur anticipates that there will be growing numbers of people (even if these Homer Simpsons are unaware of their future demands) who will demand products to make them safe and comfortable in our hotter world, then there is a huge profit motive to try to design such products. Some of these efforts will succeed and these guys will get rich and the rest of us will have a wider selection of adaptation ready products to choose from. Daron Acemoglu and Josh Linn studied this point in a very different context in their important 2004 QJE paper.