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Carbon Leakage with International Technology Spillovers

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Author Info
Reyer Gerlagh (University of Manchester)
Onno Kuik (Vrije Universiteit)

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Abstract

In this paper we study the effect of international technology spillovers on carbon leakage. We first develop and analyse two simple competing models for carbon leakage. The first model represents the pollution haven hypothesis. It focuses on the international competition between firms that produce energy-intensive goods. The second model highlights the role of a globally integrated carbon-energy market. We calculate formulas for the leakage rates in both models and, through meta-analysis, show that the second model captures best the major mechanisms reported in the CGE literature on carbon leakage. We extend this model with endogenous energy-saving technology and international technology spillovers. This feature is shown to decrease carbon leakage. We build-in the endogenous energy-saving technology in a large CGE model and verify that the results from the formal model carry over. Carbon leakage becomes negative for moderate levels of international technology spillover.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2007.33.

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Date of creation: Mar 2007
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Handle: RePEc:fem:femwpa:2007.33

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Related research
Keywords: arbon-Leakage; Climate Policy; Induced Technological Change; Trade and Environment;

Find related papers by JEL classification:
F18 - International Economics - - Trade - - - Trade and Environment
O39 - Economic Development, Technological Change, and Growth - - Technological Change - - - Other
Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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References listed on IDEAS
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  7. Maria, Corrado di & Werf, Edwin van der, 2005. "Carbon leakage revisited: unilateral climate policy with directed technical change," Discussion Paper 68, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  8. Warwick J. McKibbin & Martin T. Ross & Robert Shackleton & Peter J. Wilcoxen, 1999. "Emissions Trading, Capital Flows and the Kyoto Protocol," Economics and Environment Network Working Papers 9901, Australian National University, Economics and Environment Network. [Downloadable!]
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  9. Lanjouw, Jean Olson & Mody, Ashoka, 1996. "Innovation and the international diffusion of environmentally responsive technology," Research Policy, Elsevier, vol. 25(4), pages 549-571, June. [Downloadable!] (restricted)
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  15. Bayoumi, Tamim & Coe, David T. & Helpman, Elhanan, 1999. "R&D spillovers and global growth," Journal of International Economics, Elsevier, vol. 47(2), pages 399-428, April. [Downloadable!] (restricted)
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  16. repec:att:wimass:1920310 is not listed on IDEAS
  17. Comin, D. & Hobijn, B., 2004. "Cross-country technology adoption: making the theories face the facts," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 39-83, January. [Downloadable!] (restricted)
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  18. Corrado Di Maria & Sjak Smulders, 2005. "Trade Pessimists vs Technology Optimists: Induced Technical Change and Pollution Havens," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 4(2), pages 1344-1344. [Downloadable!] (restricted)
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  20. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1055-1089, November. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nicola Cantore & Emilio Padilla Rosa, 2009. "Emissions distribution in post–Kyoto international negotiations: a policy," Working Papers wpdea0907, Department of Applied Economics at Universitat Autonoma of Barcelona. [Downloadable!]
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