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Economic and Environmental Effectiveness of a Technology-based Climate Protocol

  • Carlo Carraro

    (University of Venice, Fondazione Eni Enrico Mattei, CEPR, CEPS, CESifo)

  • Barbara Buchner

    (Fondazione Eni Enrico Mattei)

The present stalemate in climate negotiations has led policy analysts and economists to explore the possible emergence of alternative climate regimes. This paper explores the idea of replacing international cooperation on greenhouse gas emission control with international cooperation on climate-related technological innovation and diffusion. This idea – recently proposed among others by Barrett (2001) and Benedick (2001) – is based on the insight that incentives to free-ride are much smaller in the case of technological cooperation than in the case of cooperation on emission control. This paper provides a first applied game theory analysis of a technology-based climate protocol by assessing: (i) the self-enforcingness (namely, the absence of incentives to free ride) of the coalition that would form when countries negotiate on climate-related technological cooperation; (ii) the environmental effectiveness of a technology-based climate protocol. The analysis is carried out by using a model in which endogenous and induced technical change are explicitly modelled and in which international technological spillovers are also quantified. The results of our analysis partly support Barrett’s and Benedick’s conjecture. On the one hand, a self-enforcing agreement is more likely to emerge when countries cooperate on environmental technological innovation and diffusion than when they cooperate on emission abatement. However, technological cooperation – without any commitment to emission control – may not lead to a sufficient abatement of greenhouse gas concentrations.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.61.

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Date of creation: Apr 2004
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Handle: RePEc:fem:femwpa:2004.61
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  1. Barbara Buchner & Carlo Carraro & Igor Cersosimo & Carmen Marchiori, 2002. "Back to Kyoto? US Participation and the Linkage between R&D and Climate Cooperation," CESifo Working Paper Series 688, CESifo Group Munich.
  2. Bartz, Sherry & Kelly, David L., 2008. "Economic growth and the environment: Theory and facts," Resource and Energy Economics, Elsevier, vol. 30(2), pages 115-149, May.
  3. Goulder, Lawrence H. & Mathai, Koshy, 2000. "Optimal CO2 Abatement in the Presence of Induced Technological Change," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 1-38, January.
  4. Carraro, Carlo & Marchiori, Carmen, 2002. "Stable Coalitions," CEPR Discussion Papers 3258, C.E.P.R. Discussion Papers.
    • Carlo Carraro & Carmen Marchiori, 2003. "Stable coalitions," Chapters, in: The Endogenous Formation of Economic Coalitions, chapter 5 Edward Elgar.
  5. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  6. Buchner, Barbara & Carraro, Carlo & Cersosimo, Igor, 2002. "On the Consequences of the US Withdrawal from the Kyoto/Bonn Protocol," CEPR Discussion Papers 3239, C.E.P.R. Discussion Papers.
  7. Parry, Ian W H & Pizer, William A & Fischer, Carolyn, 2003. "How Large Are the Welfare Gains from Technological Innovation Induced by Environmental Policies?," Journal of Regulatory Economics, Springer, vol. 23(3), pages 237-55, May.
  8. Carlo Carraro (ed.), 2003. "The Endogenous Formation of Economic Coalitions," Books, Edward Elgar, number 2999, March.
  9. Holtz-Eakin, Douglas & Selden, Thomas M., 1995. "Stoking the fires? CO2 emissions and economic growth," Journal of Public Economics, Elsevier, vol. 57(1), pages 85-101, May.
  10. Barrett, Scott & Stavins, Robert, 2002. "Increasing Participation and Compliance in International Climate Change Agreements," Working Paper Series rwp02-031, Harvard University, John F. Kennedy School of Government.
  11. EYCKMANS, Johan & TULKENS, Henry, 1999. "Simulating coalitionally stable burden sharing agreements for the climate change problem," CORE Discussion Papers 1999026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Carlo Carraro & Barbara Buchner, 2003. "China and the Evolution of the Present Climate Regime," Working Papers 2003.103, Fondazione Eni Enrico Mattei.
  13. Joseph E. Aldy & Scott Barrett & Robert N. Stavins, 2003. "Thirteen Plus One: A Comparison of Global Climate Policy Architectures," Working Papers 2003.64, Fondazione Eni Enrico Mattei.
  14. Alan S. Manne & Richard G. Richels, 1999. "The Kyoto Protocol: A Cost-Effective Strategy for Meeting Environmental Objectives?," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-23.
  15. Buonanno, Paolo & Carraro, Carlo & Galeotti, Marzio, 2003. "Endogenous induced technical change and the costs of Kyoto," Resource and Energy Economics, Elsevier, vol. 25(1), pages 11-34, February.
  16. Johan Eyckmans, 2001. "On the farsighted stability of the Kyoto Protocol," Energy, Transport and Environment Working Papers Series ete0103, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  17. Warwick J. McKibbin & Peter J. Wilcoxen, 1997. "A Better Way to Slow Global Climate Change," Economics and Environment Network Working Papers 9702, Australian National University, Economics and Environment Network.
  18. Kelly, David L., 2003. "On environmental Kuznets curves arising from stock externalities," Journal of Economic Dynamics and Control, Elsevier, vol. 27(8), pages 1367-1390, June.
  19. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-65, September.
  20. Böhringer, Christoph, 2001. "Climate politics from Kyoto to Bonn: from little to nothing?!?," ZEW Discussion Papers 01-49, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  21. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
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