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Climate agreements: emission quotas versus technology policies


  • Golombek, Rolf

    () (The Ragnar Frisch Centre for Economic Research)

  • Hoel, Michael

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


The Kyoto Agreement is the result of international negotiations over many years. However, because of a number of weaknesses, different sorts of climate agreement have been suggested: for example, coordinated R&D activities that reduce abatement costs for all firms. We will compare an agreement focusing only on emissions (a Kyoto type of agreement) with an agreement focusing only on technology, assuming that the costs of abatement are affected by R&D in all firms through technology spillovers. In an emissions agreement, emissions should be restricted to the extent that the carbon price exceeds the Pigovian level. For sufficiently low technology spillovers, an emissions agreement is more efficient than a technology agreement specifying an R&D subsidy to be imposed on all firms in all countries. The opposite may hold if technology spillovers are sufficiently large. Finally, an alternative technology agreement specifying R&D expenditure in each country is more efficient than an agreement specifying an R&D subsidy.

Suggested Citation

  • Golombek, Rolf & Hoel, Michael, 2006. "Climate agreements: emission quotas versus technology policies," Memorandum 21/2006, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2006_021

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    References listed on IDEAS

    1. Barbara Buchner & Carlo Carraro, 2004. "Economic and environmental effectiveness of a technology-based climate protocol," Climate Policy, Taylor & Francis Journals, vol. 4(3), pages 229-248, September.
    2. David G. Victor & Lesley A. Coben, 2005. "A Herd Mentality in the Design of International Environmental Agreements?," Global Environmental Politics, MIT Press, vol. 5(1), pages 24-57, February.
    3. Hoel Michael, 1994. "Efficient Climate Policy in the Presence of Free Riders," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 259-274, November.
    4. Golombek, Rolf & Hagem, Cathrine & Hoel, Michael, 1995. "Efficient incomplete international climate agreements," Resource and Energy Economics, Elsevier, vol. 17(1), pages 25-46, May.
    5. 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.
    6. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-121, January.
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    More about this item


    climate policy; international climate 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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