Endogenous Technology and Tradable Emission Quotas
We study an international climate agreement that assigns emission quotas to each participating country. Unlike the simplest models in the literature, we assume that abatement costs are affected by R&D activities undertaken in all firms in all countries, i.e. abatement technologies are endogenous. In line with the Kyoto agreement we assume that the international climate agreement does not include R&D policies. We show that for a second-best agreement, marginal costs of abatement should exceed the Pigovian level. Moreover, marginal costs of abatement differ across countries in the second-best quota agreement with heterogeneous countries. In other words, the second-best outcome cannot be achieved if emission quotas are tradable.
|Date of creation:||Mar 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Corso Magenta, 63 - 20123 Milan|
Web page: http://www.feem.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Xepapadeas, A., 1995. "Induced technical change and international agreements under greenhouse warming," Resource and Energy Economics, Elsevier, vol. 17(1), pages 1-23, May.
- Barbara Buchner & Carlo Carraro, 2004.
"Economic and environmental effectiveness of a technology-based climate protocol,"
Taylor & Francis Journals, vol. 4(3), pages 229-248, September.
- Carlo Carraro & Barbara Buchner, 2004. "Economic and Environmental Effectiveness of a Technology-based Climate Protocol," Working Papers 2004.61, Fondazione Eni Enrico Mattei.
- Carlo Carraro & Barbara Buchner, 2006. "Economic and Environmental Effectiveness of a Technology-based Climate Protocol," Working Papers 2006_12, Department of Economics, University of Venice "Ca' Foscari".
- Keller, Wolfgang, 2001.
"Geographic Localization of International Technology Diffusion,"
CEPR Discussion Papers
2706, C.E.P.R. Discussion Papers.
- Wolfgang Keller, 2002. "Geographic Localization of International Technology Diffusion," American Economic Review, American Economic Association, vol. 92(1), pages 120-142, March.
- Wolfgang Keller, 2000. "Geographic Localization of International Technology Diffusion," NBER Working Papers 7509, National Bureau of Economic Research, Inc.
- Rosendahl, Knut Einar, 2004.
"Cost-effective environmental policy: implications of induced technological change,"
Journal of Environmental Economics and Management,
Elsevier, vol. 48(3), pages 1099-1121, November.
- Knut Einar Rosendahl, 2002. "Cost-effective environmental policy: Implications of induced technological change," Discussion Papers 314, Statistics Norway, Research Department.
- Michael Hoel & Rolf Golombek, 2004.
"Climate Agreements and Technology Policy,"
2004.90, Fondazione Eni Enrico Mattei.
- Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January.
- Golombek Rolf & Hoel Michael, 2006. "Second-Best Climate Agreements and Technology Policy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-30, January.
- Carlo Carraro & Carmen Marchiori, 2003. "Endogenous Strategic Issue Linkage in International Negotiations," Working Papers 2003.40, Fondazione Eni Enrico Mattei.
When requesting a correction, please mention this item's handle: RePEc:fem:femwpa:2006.42. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (barbara racah)
If references are entirely missing, you can add them using this form.