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Climate Policy under Technology Spillovers

Author

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  • Golombek, Rolf

    () (Ragnar Frisch Centre for Economic Research)

  • Hoel, Michael

    () (Dept. of Economics, University of Oslo)

Abstract

We study climate policy when there are technological spillovers between countries, and there is no instrument that (directly) corrects for these externalities. Without an international climate agreement, the (non-cooperative) equilibrium depends on whether countries use tradable quotas or carbon taxes as their environmental policy instruments. All countries are better off in the tax case than in the quota case. Two types of international climate agreements are then studied: One is a Kyoto type of agreement where each country is assigned a specific number of internationally tradable quotas. In the second type of agreement a common carbon tax is used domestically in all countries. None of the cases satisfy the conditions for the social optimum. Even if the quota price is equal to the Pigovian level, R&D investments will be lower than what is socially optimal in the Kyoto case. It is also argued that the quota agreement gives higher R&D expenditures and more abatement than the tax agreement.

Suggested Citation

  • Golombek, Rolf & Hoel, Michael, 2003. "Climate Policy under Technology Spillovers," Memorandum 22/2003, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2003_022
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Michael Hoel & Rolf Golombek, 2004. "Climate Agreements and Technology Policy," Working Papers 2004.90, Fondazione Eni Enrico Mattei.
    2. Strand, Jon & Miller, Sebastian & Siddiqui, Sauleh, 2011. "Infrastructure investments under uncertainty with the possibility of retrofit : theory and simulations," Policy Research Working Paper Series 5516, The World Bank.
    3. Bård Harstad, 2016. "The Dynamics Of Climate Agreements," Journal of the European Economic Association, European Economic Association, vol. 14(3), pages 719-752, June.
    4. Reyer Gerlagh & Snorre Kverndokk & Knut Rosendahl, 2009. "Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 369-390, July.
    5. Belgodere, Antoine & Prunetti, Dominique, 2007. "International coordination over emissions and R&D expenditures: What does oil scarcity change?," MPRA Paper 28164, University Library of Munich, Germany.
    6. Rolf Golombek & Michael Hoel, 2005. "Climate Policy under Technology Spillovers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 201-227, June.
    7. Gerlagh , Reyer & Kverndokk , Snorre & Rosendahl , Knut Einar, 2007. "Optimal Timing of Environmental Policy: Interaction Between Environmental Taxes and Innovation Externalities," Memorandum 26/2006, Oslo University, Department of Economics.
    8. Matthieu Glachant & Yann Ménière, 2011. "Project Mechanisms and Technology Diffusion in Climate Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(3), pages 405-423, July.
    9. Reyer Gerlagh & Snorre Kverndokk & Knut Einar Rosendah, 2008. "Linking Environmental and Innovation Policy," Working Papers 2008.53, Fondazione Eni Enrico Mattei.
    10. Miyuki Nagashima & Rob Dellink, 2008. "Technology spillovers and stability of international climate coalitions," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 343-365, December.
    11. Torstein Bye & Annegrete Bruvoll, 2008. "Multiple instruments to change energy behaviour: The emperor's new clothes?," Discussion Papers 549, Statistics Norway, Research Department.
    12. Enrica De Cian, 2006. "International Technology Spillovers in Climate-Economy Models: Two Possible Approaches," Working Papers 2006.141, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    Climate policy; international environmental agreements; R&D; technology spillovers;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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