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Technology Diffusion, Abatement Cost, and Transboundary Pollution

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  • Heal, Geoffrey
  • Tarui, Nori

Abstract

This 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.

Suggested Citation

  • Heal, Geoffrey & Tarui, Nori, 2008. "Technology Diffusion, Abatement Cost, and Transboundary Pollution," Climate Change Modelling and Policy Working Papers 46653, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcc:46653
    DOI: 10.22004/ag.econ.46653
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    Cited by:

    1. Bertinelli, Luisito & Camacho, Carmen & Zou, Benteng, 2014. "Carbon capture and storage and transboundary pollution: A differential game approach," European Journal of Operational Research, Elsevier, vol. 237(2), pages 721-728.

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    More about this item

    Keywords

    Environmental Economics and Policy; Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • 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

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