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Economic and environmental effectiveness of a technology-based climate protocol

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  • Barbara Buchner
  • Carlo Carraro

Abstract

The present stalemate in climate negotiations between the USA and the other Annex I countries has led policy analysts and economists to explore the possible emergence of alternative climate regimes that may be applied after 2012. This article explores the idea of replacing international cooperation on greenhouse gas emission control with international cooperation on climate-related technological innovation and diffusion. This idea-recently proposed among others by Barrett (2001) and Benedick (2001)-is based on the insight that incentives to free-ride are much smaller in the case of technological cooperation than in the case of cooperation on emission control. This article provides a first applied game theory analysis of a technology-based climate protocol by assessing: (i) the self-enforcingness (namely, the absence of incentives to free-ride) of the coalition that would form when countries negotiate on climate-related technological cooperation; (ii) the environmental effectiveness of a technology-based climate protocol. The analysis is carried out by using a model in which endogenous and induced technical change are explicitly modelled. The results of our analysis partly support Barrett's and Benedick's conjectures. On the one hand, a self-enforcing agreement is more likely to emerge when countries cooperate on environmental technological innovation and diffusion than when they cooperate on emission abatement. However, technological cooperation-without any commitment to emission control-may not lead to a sufficient abatement of greenhouse gas concentrations.

Suggested Citation

  • Barbara Buchner & Carlo Carraro, 2004. "Economic and environmental effectiveness of a technology-based climate protocol," Climate Policy, Taylor & Francis Journals, vol. 4(3), pages 229-248, September.
    • Handle: RePEc:taf:tcpoxx:v:4:y:2004:i:3:p:229-248
    DOI: 10.1080/14693062.2004.9685523
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    Cited by:

    1. El-Sayed, Abeer & Rubio, Santiago J., 2014. "Sharing R&D investments in cleaner technologies to mitigate climate change," Resource and Energy Economics, Elsevier, vol. 38(C), pages 168-180.
    2. Golombek, Rolf & Hoel, Michael, 2005. "The Kyoto agreement and Technology Spillovers," Memorandum 05/2005, Oslo University, Department of Economics.
    3. Golombek, Rolf & Hoel, Michael, 2008. "Endogenous technology and tradable emission quotas," Resource and Energy Economics, Elsevier, vol. 30(2), pages 197-208, May.
    4. Carlo Carraro & Barbara Buchner, 2006. "Parallel Climate Blocs. Incentives to cooperation in international climate negotiations," Working Papers 2006_45, Department of Economics, University of Venice "Ca' Foscari".
    5. Ravallion, Martin & Lokshin, Michael, 2004. "Gainers and losers from trade reform in Morocco," Policy Research Working Paper Series 3368, The World Bank.
    6. Alberto Ansuategi & Marta Escapa, 2004. "Is international cooperation on climate change good for the environment?," Economics Bulletin, AccessEcon, vol. 17(7), pages 1-11.
    7. Golombek, Rolf & Hoel, Michael, 2006. "Climate agreements: emission quotas versus technology policies," Memorandum 21/2006, Oslo University, Department of Economics.

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • H0 - Public Economics - - General
    • H4 - Public Economics - - Publicly Provided Goods
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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