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Trade, technology, and the environment: Does access to technology promote environmental regulation?

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  • Lovely, Mary
  • Popp, David

Abstract

Focusing specifically on regulation of coal-fired power plants, we examine how technological innovation by early adopters influences the timing of new environmental regulation in non-innovating countries. We build a general equilibrium model of an open economy to identify the political-economy determinants of regulation. With a newly created dataset of SO2 and NOx regulations for coal-fired power plants and a patent-based measure of the technology frontier, we estimate the determinants of environmental regulation diffusion. Our findings support the hypothesis that international economic integration eases access to environmentally friendly technologies and leads to earlier adoption, ceteris paribus, of regulation in non-innovating countries. However, we also find evidence that domestic trade protection promotes earlier adoption allowing shifts of regulatory costs to domestic consumers. Furthermore, international market power permits large countries to shift costs to foreign consumers. Other political economy factors, such as the quality of domestic coal, are also important determinants.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 61 (2011)
Issue (Month): 1 (January)
Pages: 16-35

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Handle: RePEc:eee:jeeman:v:61:y:2011:i:1:p:16-35

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Web page: http://www.elsevier.com/locate/inca/622870

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Keywords: Technology transfer Patents Air pollution Political economy Regulation;

References

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Citations

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Cited by:
  1. Wei Jin, 2012. "Can China Harness Globalization to Reap Carbon Savings? Modeling International Technology Diffusion in a Multi-region Framework," CAMA Working Papers, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University 2012-52, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  2. Chang, Chun Ping & Berdiev, Aziz N., 2011. "The political economy of energy regulation in OECD countries," Energy Economics, Elsevier, Elsevier, vol. 33(5), pages 816-825, September.
  3. Nicole A. MATHYS & Jaime de MELO, 2012. "Reconciling Trade and Climate Policies," Working Papers, FERDI P37, FERDI.
  4. Dutz, Mark A. & Sharma, Siddharth, 2012. "Green growth, technology and innovation," Policy Research Working Paper Series, The World Bank 5932, The World Bank.
  5. Aalbers, Rob & Shestalova, Victoria & Kocsis, Viktória, 2013. "Innovation policy for directing technical change in the power sector," Energy Policy, Elsevier, Elsevier, vol. 63(C), pages 1240-1250.
  6. Antoine Dechezleprêtre & Richard Perkins & Eric Neumayer, 2012. "Regulatory distance and the transfer of new environmentally sound technologies: evidence from the automobile sector," Grantham Research Institute on Climate Change and the Environment Working Papers, Grantham Research Institute on Climate Change and the Environment 73, Grantham Research Institute on Climate Change and the Environment.
  7. Rob Aalbers & Victoria Shestalova & Viktoria Kocsis, 2012. "Innovation policy for directing technical change in the power sector," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 223, CPB Netherlands Bureau for Economic Policy Analysis.
  8. Popp, David, 2012. "The role of technological change in green growth," Policy Research Working Paper Series, The World Bank 6239, The World Bank.
  9. Wei Jin & ZhongXiang Zhang, 2014. "On the Mechanism of International Technology Diffusion for Energy Productivity Growth," CCEP Working Papers, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University 1405, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  10. David Popp, 2012. "The Role of Technological Change in Green Growth," NBER Working Papers 18506, National Bureau of Economic Research, Inc.
  11. Francesco Nicolli & Francesco Vona, 2014. "Heterogeneous policies, heterogenous technologies : the case of renewable energy," Sciences Po publications, Sciences Po 2014-15, Sciences Po.
  12. Copeland, Brian R., 2012. "International trade and green growth," Policy Research Working Paper Series, The World Bank 6235, The World Bank.
  13. Dekker, Thijs & Vollebergh, Herman R.J. & de Vries, Frans P. & Withagen, Cees A., 2012. "Inciting protocols," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 64(1), pages 45-67.
  14. Forslid, Rikard & Okubo, Toshihiro & Ulltveit-Moe, Karen-Helene, 2011. "International trade, CO2 emissions and heterogeneous firms," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8583, C.E.P.R. Discussion Papers.
  15. Wei Jin & ZhongXiang Zhang, 2014. "Explaining the Slow Pace of Energy Technological Innovation: Why Market Conditions Matter?," Working Papers, Fondazione Eni Enrico Mattei 2014.18, Fondazione Eni Enrico Mattei.

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