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Impure public technologies and environmental policy

Author

Listed:
  • Anil Markandya
  • Dirk T.G. Rübbelke

Abstract

Purpose - The purpose of this paper is to analyse the role of transfers as a means to overcome inefficiencies in the provision of impure public goods. The paper employs the example of international conditional transfers targeted to overcome suboptimal low climate protection efforts by influencing the abatement technology choice of countries. Design/methodology/approach - The paper applies the Lancastrian characteristics approach and conduct numerical simulations for divergent degrees of substitutability between different characteristics. The paper takes into account climate-protection benefits (global pollution reduction) as well as co-benefits (local pollution reduction) of climate protection activities. Findings - The analysis shows that individual country solution can be improved upon by making transfers from the richer countries to the poorer ones, if the latter have a lower relative preference for the global public goods (global pollution reduction) than the former. The magnitudes of such transfers will depend on the relative benefits of the global and local pollutants in the two countries. The authors also investigated the dependency of the potential for transfers on the degree of complementarity between global and local pollution characteristics. With a “Cobb Douglas” type of function used here the elasticity of substitution between the two is of course one. With a zero degree of substitutability the adjustment to a lower level of the global public good in fact starts to happen at a lower per capita income level. The scope for conditional transfers is still there, although the gains can be slightly smaller than when adjustment on the “global pollution characteristic – local pollution characteristic” margin is possible. Originality/value - This paper is a contribution to the literature on impure public goods. In particular, the authors examine the role of international transfers in obtaining an efficient global allocation of resources in the presence of such public goods. To date the analysis of impure public goods has not examined the case of a continuum of technologies where an efficient solution requires conditional transfers, i.e. payments from one country to another to undertake a different supply of global and local public goods than the second country would wish to undertake.

Suggested Citation

  • Anil Markandya & Dirk T.G. Rübbelke, 2012. "Impure public technologies and environmental policy," Journal of Economic Studies, Emerald Group Publishing, vol. 39(2), pages 128-143, May.
  • Handle: RePEc:eme:jespps:v:39:y:2012:i:2:p:128-143
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Corradini, Massimiliano & Costantini, Valeria & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Unveiling the dynamic relation between R&D and emission abatement," Ecological Economics, Elsevier, vol. 102(C), pages 48-59.
    2. Massimiliano Corradini & Valeria Costantini & Massimiliano Mazzanti & Susanna Mancinelli, 2014. "Linking innovation investment and environmental performance: an impure dynamic public good model," SEEDS Working Papers 0814, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Apr 2014.
    3. Massimiliano Mazzanti & Valeria Costantini & Susanna Mancinelli & Massimilano Corradini, 2011. "Environmental and Innovation Performance in a Dynamic Impure Public Good Framework," Working Papers 201117, University of Ferrara, Department of Economics.
    4. Giulio Cainelli & Massimiliano Mazzanti & Simone Borghesi, 2012. "The European Emission Trading Scheme and environmental innovation diffusion: Empirical analyses using Italian CIS data," Working Papers 201201, University of Ferrara, Department of Economics.
    5. Richard Cornes, 2016. "Aggregative Environmental Games," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 339-365, February.
    6. Giulio Cainelli & Massimiliano Mazzanti & Roberto Zoboli, 2011. "Enviromental Innovations, Complementarity and Local/Global Cooperation," Working Papers 201104, University of Ferrara, Department of Economics.
    7. Simone Borghesi & Giulio Cainelli & Massimiliano Mazzanti, 2012. "Brown Sunsets and Green Dawns in the Industrial Sector: Environmental Innovations, Firm Behavior and the European Emission Trading," Working Papers 2012.03, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    Impure public goods; Lancastrian characteristics approach; Conditional transfers; Ancillary benefits of climate policy; Environmental management; Climatology;

    JEL classification:

    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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