IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkwp/1732.html
   My bibliography  Save this paper

Expectation-driven climate treaties with breakthrough technologies

Author

Listed:
  • Narita, Daiju
  • Wagner, Ulrich J.

Abstract

Recent research has shown that agreements centered on the adoption of breakthrough technologies can break the deadlock in international climate negotiations if the mitigation technology exhibits a network externality that transforms full cooperation into a self-enforcing outcome. This paper shows that the same externality also increases strategic uncertainty about future technology adoption, which makes coordination on the cooperative outcome more demanding. We analyze this coordination problem in a dynamic game of technology adoption with convex switching costs. We find that the adoption dynamics for some technologies depend exclusively on countries' expectations about future adoption. This possibility calls for a more prominent role of expectation management in climate policy. Another implication is that the choice of breakthrough technologies should be guided not only by economic efficiency and strategic adoption incentives but also by the amount of strategic uncertainty they engender.

Suggested Citation

  • Narita, Daiju & Wagner, Ulrich J., 2011. "Expectation-driven climate treaties with breakthrough technologies," Kiel Working Papers 1732, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1732
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/49388/1/667984925.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-791, October.
    2. Heal, Geoffrey & Tarui, Nori, 2010. "Investment and emission control under technology and pollution externalities," Resource and Energy Economics, Elsevier, vol. 32(1), pages 1-14, January.
    3. Paul Krugman, 1991. "History versus Expectations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 651-667.
    4. Scott Barrett, 2006. "Climate Treaties and "Breakthrough" Technologies," American Economic Review, American Economic Association, vol. 96(2), pages 22-25, May.
    5. de Coninck, Heleen & Fischer, Carolyn & Newell, Richard G. & Ueno, Takahiro, 2008. "International technology-oriented agreements to address climate change," Energy Policy, Elsevier, vol. 36(1), pages 335-356, January.
    6. Narita, Daiju, 2010. "Climate policy as expectation management?," Kiel Working Papers 1624, Kiel Institute for the World Economy (IfW Kiel).
    7. Geoffrey Heal & Bengt Kriström, 2002. "Uncertainty and Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 3-39, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Narita, Daiju, 2011. "Climate policy as expectation management?," Kiel Working Papers 1681, Kiel Institute for the World Economy (IfW Kiel).
    2. Jin, Wei, 2016. "International technology diffusion, multilateral R&D coordination, and global climate mitigation," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 357-372.
    3. 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.
    4. Wei Jin, 2012. "International Knowledge Spillover and Technology Externality: Why Multilateral R&D Coordination Matters for Global Climate Governance," CAMA Working Papers 2012-53, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    5. Camacho, Carmen, 2013. "Migration modelling in the New Economic Geography," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 233-244.
    6. Larry Karp & Thierry Paul, 2005. "Intersectoral Adjustment and Policy Intervention: the Importance of General‐Equilibrium Effects," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 330-355, May.
    7. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-François Thisse, 2021. "Agglomeration And Trade Revisited," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 3, pages 59-85, World Scientific Publishing Co. Pte. Ltd..
    8. Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February.
    9. Masahisa Fujita & Jacques‐François Thisse, 2003. "Does Geographical Agglomeration Foster Economic Growth? And Who Gains and Loses from It?," The Japanese Economic Review, Japanese Economic Association, vol. 54(2), pages 121-145, June.
    10. Oyama, Daisuke, 2009. "Agglomeration under forward-looking expectations: Potentials and global stability," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 696-713, November.
    11. Johannes Urpelainen, 2013. "Can strategic technology development improve climate cooperation? A game-theoretic analysis," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(6), pages 785-800, August.
    12. Johannes Urpelainen, 2012. "Technology investment, bargaining, and international environmental agreements," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 12(2), pages 145-163, May.
    13. Robert Schmidt & Roland Strausz, 2015. "On the Timing of Climate Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(3), pages 521-547, November.
    14. Terra, Maria Cristina T., 1999. "Tariff design with varying degrees of commitment," Journal of Development Economics, Elsevier, vol. 58(1), pages 123-147, February.
    15. Ottaviano, Gianmarco I. P., 1999. "Integration, geography and the burden of history," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 245-256, March.
    16. Narita, Daiju, 2010. "Climate policy as expectation management?," Kiel Working Papers 1624, Kiel Institute for the World Economy (IfW Kiel).
    17. Mossay, Pascal, 2013. "A theory of rational spatial agglomerations," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 385-394.
    18. Helm, Carsten & Schmidt, Robert C., 2015. "Climate cooperation with technology investments and border carbon adjustment," European Economic Review, Elsevier, vol. 75(C), pages 112-130.
    19. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 873-937, Elsevier.
    20. Hoel, Michael & de Zeeuw, Aart, 2013. "Technology Agreements with Heterogeneous Countries," Memorandum 02/2013, Oslo University, Department of Economics.

    More about this item

    Keywords

    International environmental agreements (IEAs); climate policy; technology choice; expectations; multiple equilibria;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkwp:1732. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.