IDEAS home Printed from https://ideas.repec.org/a/wly/canjec/v40y2007i4p1100-1117.html
   My bibliography  Save this article

Tariffs and the adoption of clean technology under asymmetric information

Author

Listed:
  • Rodney D. Ludema
  • Taizo Takeno

Abstract

. This paper examines the effect of a tariff on the decision of a foreign monopolist to adopt ‘clean’ technology, which reduces the flow of a negative cross‐border externality. The clean technology increases the marginal cost of production relative to the dirty technology, but only the firm knows the extent of the increase. Under complete information, despite its protectionist motivation, the importing country's optimal tariff induces the firm to adopt the clean technology if and only if it is globally efficient to do so. Under incomplete information, this efficiency property is disrupted, and the firm biases its choice in favour of dirty technology. JEL classification: F13, F18 Ce mémoire examine l'effet d'un tarif douanier sur la décision d'un monopoleur étranger d'adopter une technologie qui réduise le flux d'effets externes négatifs à travers la frontière. La technologie propre accroît le coût marginal de production par rapport à ce qu'il serait avec une technologie salissante, mais seule l'entreprise connaît la taille de cet accroissement. En régime d'information complète, malgré ses motivations protectionnistes, le tarif optimal du pays importateur entraîne l'entreprise à adopter la technologie propre, si et seulement si c'est globalement efficient de le faire. En régime d'information incomplète, cette propriété est perturbée et l'entreprise tend à faire ses choix en faveur de la technologie salissante.

Suggested Citation

  • Rodney D. Ludema & Taizo Takeno, 2007. "Tariffs and the adoption of clean technology under asymmetric information," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(4), pages 1100-1117, November.
  • Handle: RePEc:wly:canjec:v:40:y:2007:i:4:p:1100-1117
    DOI: 10.1111/j.1365-2966.2007.00444.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1365-2966.2007.00444.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1365-2966.2007.00444.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rodney D. Ludema & Ian Wooton, 1994. "Cross-Border Externalities and Trade Liberalization: The Strategic Control of Pollution," Canadian Journal of Economics, Canadian Economics Association, vol. 27(4), pages 950-966, November.
    2. Kyle Bagwell & Robert W. Staiger, 2001. "Domestic Policies, National Sovereignty, and International Economic Institutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 519-562.
    3. Choi, Jay Pil, 1995. "Optimal tariffs and the choice of technology Discriminatory tariffs vs. the 'Most Favored Nation' clause," Journal of International Economics, Elsevier, vol. 38(1-2), pages 143-160, February.
    4. Engel, Stefanie, 2004. "Achieving environmental goals in a world of trade and hidden action: the role of trade policies and eco-labeling," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1122-1145, November.
    5. Taiji Furusawa & Keisaku Higashida & Jota Ishikawa, 2004. "Tariffs versus quotas in the presence of imperfect competition and cross‐border externalities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(2), pages 445-458, May.
    6. Crowley, Meredith A., 2006. "Do safeguard tariffs and antidumping duties open or close technology gaps?," Journal of International Economics, Elsevier, vol. 68(2), pages 469-484, March.
    7. Regibeau Pierre M & Gallegos Alberto, 2004. "Managed Trade, Trade Liberalisation and Local Pollution," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(2), pages 1-26, November.
    8. Chang, Howard F., 1997. "Carrots, sticks, and international externalities," International Review of Law and Economics, Elsevier, vol. 17(3), pages 309-324, September.
    9. Ludema, Rodney D & Wooton, Ian, 1997. "International Trade Rules and Environmental Cooperation under Asymmetric Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 605-625, August.
    10. James R. MARKUSEN, 2021. "International Externalities And Optimal Tax Structures," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 16, pages 341-355, World Scientific Publishing Co. Pte. Ltd..
    11. Chang, H.F., 1997. "Carrots, Sticks, and International Externalities," Papers 97-13, Georgetown University Law Center.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahmed Waqar Qasim, 2023. "Firms and Technology Adoption: The Role of Political Institutions and Market Size (Article)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(1), pages 61-85.
    2. Robert W. Staiger & Alan O. Sykes, 2011. "International Trade, National Treatment, and Domestic Regulation," The Journal of Legal Studies, University of Chicago Press, vol. 40(1), pages 149-203.
    3. Alberto Gallegos David, 2017. "Managed Trade and Environmental Policy under Imperfect Competition," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 12(3), pages 29-44, Julio-Sep.
    4. Takeshi Iida & Kenji Takeuchi, 2010. "Policy-Induced Environmental Technology Transfer," Discussion Papers 1008, Graduate School of Economics, Kobe University.
    5. Ullah, Ayat & Arshad, Muhammad & Kächele, Harald & Zeb, Alam & Mahmood, Nasir & Müller, Klaus, 2020. "Socio-economic analysis of farmers facing asymmetric information in inputs markets: evidence from the rainfed zone of Pakistan," Technology in Society, Elsevier, vol. 63(C).
    6. Slim Ben Youssef, 2010. "Adoption of a cleaner technology by a monopoly under incomplete information," Economics Bulletin, AccessEcon, vol. 30(1), pages 734-743.
    7. Robert W. Staiger & Alan O. Sykes, 2009. "International Trade and Domestic Regulation," NBER Working Papers 15541, National Bureau of Economic Research, Inc.
    8. Takeshi Iida & Kenji Takeuchi, 2011. "Does free trade promote environmental technology transfer?," Journal of Economics, Springer, vol. 104(2), pages 159-190, October.

    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. Robert W. Staiger & Alan O. Sykes, 2009. "International Trade and Domestic Regulation," NBER Working Papers 15541, National Bureau of Economic Research, Inc.
    2. Harvey E. Lapan & Shiva Sikdar, 2011. "Strategic Environmental Policy under Free Trade with Transboundary Pollution," Review of Development Economics, Wiley Blackwell, vol. 15(1), pages 1-18, February.
    3. Sikdar, Shiva, 2008. "Essays in macroeconomics, international trade and the environment," ISU General Staff Papers 2008010108000016832, Iowa State University, Department of Economics.
    4. Engel, Stefanie, 2004. "Achieving environmental goals in a world of trade and hidden action: the role of trade policies and eco-labeling," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1122-1145, November.
    5. Nikos Tsakiris & Michael Michael & Panos Hatzipanayotou, 2014. "Asymmetric Tax Policy Responses in Large Economies With Cross-Border Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(4), pages 563-578, August.
    6. Klimenko, Mikhail M., 2009. "Policies and international trade agreements on technical compatibility for industries with network externalities," Journal of International Economics, Elsevier, vol. 77(2), pages 151-166, April.
    7. Taiji Furusawa & Keisaku Higashida & Jota Ishikawa, 2004. "Tariffs versus quotas in the presence of imperfect competition and cross‐border externalities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(2), pages 445-458, May.
    8. Panos Hatzipanayotou & Sajal Lahiri & Michael S. Michael, 2002. "Can cross–border pollution reduce pollution?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(4), pages 805-818, November.
    9. Edward J. Balistreri & Daniel T. Kaffine & Hidemichi Yonezawa, 2019. "Optimal Environmental Border Adjustments Under the General Agreement on Tariffs and Trade," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1037-1075, November.
    10. She, Chih-Min, 2015. "What determines the technology adoption of firms under optimal tax?," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 274-289.
    11. Takao Asano & Noriaki Matsushima, 2014. "Environmental regulation and technology transfers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(3), pages 889-904, August.
    12. World Bank, 2007. "International trade and Climate Change : Economic, Legal, and Institutional Perspectives," World Bank Publications - Books, The World Bank Group, number 6831.
    13. Robert W. Staiger & Alan O. Sykes, 2011. "International Trade, National Treatment, and Domestic Regulation," The Journal of Legal Studies, University of Chicago Press, vol. 40(1), pages 149-203.
    14. Jota Ishikawa & Kazuharu Kiyono, 2000. "International Trade and Global Warming," CIRJE F-Series CIRJE-F-78, CIRJE, Faculty of Economics, University of Tokyo.
    15. Bagwell,K. & Staiger,R.W., 2000. "GATT-think," Working papers 19, Wisconsin Madison - Social Systems.
    16. Thomas Eichner & Rüdiger Pethig, 2019. "Bottom-up world climate policies: Preserving fossil fuel deposits vs. capping fuel consumption," Canadian Journal of Economics, Canadian Economics Association, vol. 52(3), pages 993-1035, August.
    17. M. Fabbri & P. N. Barbieri & M. Bigoni, 2016. "Ride Your Luck! A Field Experiment on Lottery-based Incentives for Compliance," Working Papers wp1089, Dipartimento Scienze Economiche, Universita' di Bologna.
    18. Copeland, Brian R. & Taylor, M. Scott, 2005. "Free trade and global warming: a trade theory view of the Kyoto protocol," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 205-234, March.
    19. Thomas Eichner & Rüdiger Pethig, 2012. "Stable Climate Coalitions (Nash) and International Trade," CESifo Working Paper Series 3915, CESifo.
    20. Runge, C. Ford, 2001. "A Global Environment Organization (Geo) And The World Trading System: Prospects And Problems," Working Papers 14448, University of Minnesota, Center for International Food and Agricultural Policy.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment

    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:wly:canjec:v:40:y:2007:i:4:p:1100-1117. 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1540-5982 .

    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.