Endogenous technology and tradable emission quotas
AbstractWe study an international climate agreement that assigns emission quotas to each participating country. Unlike the simplest models in the literature, we assume that abatement costs are affected by R&D activities undertaken in all firms in all countries, i.e. abatement technologies are endogenous. In line with the Kyoto agreement we assume that the international climate agreement does not include R&D policies. We show that for a secondbest agreement, marginal costs of abatement should exceed the Pigovian level. Moreover, marginal costs of abatement differ across countries in the second-best quota agreement with heterogeneous countries. In other words, the second-best outcome cannot be achieved if emission quotas are tradable.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 03/2006.
Length: 16 pages
Date of creation: 17 Feb 2006
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
Climate policy; international climate agreements; emission quotas; technology spillovers;
Other versions of this item:
- Golombek, Rolf & Hoel, Michael, 2008. "Endogenous technology and tradable emission quotas," Resource and Energy Economics, Elsevier, vol. 30(2), pages 197-208, May.
- Michael Hoel & Rolf Golombek, 2006. "Endogenous Technology and Tradable Emission Quotas," Working Papers 2006.42, Fondazione Eni Enrico Mattei.
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-26 (All new papers)
- NEP-ENE-2006-02-26 (Energy Economics)
- NEP-ENV-2006-02-26 (Environmental Economics)
- NEP-INO-2006-02-26 (Innovation)
- NEP-PBE-2006-02-26 (Public Economics)
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