Technology Diffusion, Abatement Cost, and Transboundary Pollution
AbstractThis paper studies countries’ incentives to develop advanced pollution abatement technology when technology may spillover across countries and pollution abatement is a global public good. We are motivated in part by the problem of global warming: a solution to this involves providing a global public good, and will surely require the development and implementation of new technologies. We show that at the Nash equilibrium of a simultaneous-move game with R&D investment and emission abatement, whether the free rider effect prevails and under-investment and excess emissions occur depends on the degree of technology spillovers and the effect of R&D on the marginal abatement costs. There are cases in which, contrary to conventional wisdom, Nash equilibrium investments in emissions reductions exceed the first-best case.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2008.96.
Date of creation: Nov 2008
Date of revision:
International Environmental Agreement; Pollution Abatement Costs; Endogenous Technological Change;
Other versions of this item:
- Geoffrey Heal & Nori Tarui, 2008. "Technology diffusion, abatement cost, and transboundary pollution," Working Papers 200803, University of Hawaii at Manoa, Department of Economics.
- Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
- H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-17 (All new papers)
- NEP-ENE-2009-01-17 (Energy Economics)
- NEP-ENV-2009-01-17 (Environmental Economics)
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