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Climate Agreements and Technology Policy

Author

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  • Golombek, Rolf

    () (The Ragnar Frisch Centre for Economic Research)

  • Hoel, Michael

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

Abstract

We study climate policy when there are technology spillovers within and across countries, and the technology externalities within each country are corrected through a domestic subsidy of R&D investments. We compare the properties of international climate agreements when the inter-country externalities from R&D are not regulated through the climate agreement. With an international agreement controlling abatements directly through emission quotas, the equilibrium R&D subsidy is lower that the socially optimal subsidy.The equilibrium subsidy is even lower if the climate agreement does not specify emission levels directly, but instead imposes a common carbon tax.Social costs are higher under a tax agreement than under a quota agreement.Moreover, for a reasonable assumption on the abatement cost function, R&D investments and abatement levels are lower under a tax agreement than under a quota agreement. Total emissions may be higher or lower in a second-best optimal quota agreement than in the first-best optimum.

Suggested Citation

  • Golombek, Rolf & Hoel, Michael, 2004. "Climate Agreements and Technology Policy," Memorandum 11/2004, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2004_011
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2004/Memo-11-2004.pdf
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    References listed on IDEAS

    as
    1. 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.
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    3. Carlo Carraro & Carmen Marchiori, 2003. "Endogenous Strategic Issue Linkage in International Negotiations," Working Papers 2003.40, Fondazione Eni Enrico Mattei.
    4. 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.
    5. Slim Ben Youssef, 2009. "Transboundary pollution, R&D spillovers and international trade," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 235-250, March.
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    7. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
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    Cited by:

    1. Alistair Ulph & David Ulph, 2007. "Climate change—environmental and technology policies in a strategic context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 159-180, May.
    2. Golombek, Rolf & Hoel, Michael, 2008. "Endogenous technology and tradable emission quotas," Resource and Energy Economics, Elsevier, vol. 30(2), pages 197-208, May.

    More about this item

    Keywords

    Climate policy; international environmental agreements; R&D Policy; 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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