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Environmental Technology Transfer via Free Trade

  • Takeshi Iida

    (Graduate School of Economics, Kobe University)

  • Kenji Takeuchi

    ()

    (Graduate School of Economics, Kobe University)

This paper considers a model of international duopoly with global pollution to investigate the impact of tariff policy and licensing contracts on environmental technology transfer. Our main finding is that free trade is not always preferable.When the protection of intellectual property rights (IPR) is within a certain range, there is a possibility that the total world welfare is higher under a positive tariff rate than under a zero tariff rate. This implies that the protection of IPR beyond the range is a prerequisite for the justification of free trade.We also show how developing countries are induced to sign a licensing contract.Even if the licensing does not directly improve the competitiveness of the firm in the developing country, raising the tariff rate can increase the revenue of the country. In contrast, when there is no licensing agreement, the local government sets a lower tariff rate and diffuses the products of foreign firms,because the products of local firms are associated with pollution.

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File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2009/0904.pdf
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Paper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 0904.

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Length: 20pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:koe:wpaper:0904
Contact details of provider: Web page: http://www.econ.kobe-u.ac.jp
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  1. Mukherjee, Arijit & Pennings, Enrico, 2006. "Tariffs, licensing and market structure," European Economic Review, Elsevier, vol. 50(7), pages 1699-1707, October.
  2. David Popp, 2008. "International Technology Transfer for Climate Policy," Center for Policy Research Policy Briefs 39, Center for Policy Research, Maxwell School, Syracuse University.
  3. Kabiraj, Tarun & Marjit, Sugata, 2003. "Protecting consumers through protection: The role of tariff-induced technology transfer," European Economic Review, Elsevier, vol. 47(1), pages 113-124, February.
  4. Azusa Itoh & Makoto Tawada, 2003. "Environment, trade and the welfare gains from the transfer of pollution abatement technology," Papers in Regional Science, Springer, vol. 82(4), pages 519-534, November.
  5. Hattori, Keisuke, 2007. "Policy and Product Differentiations Encourage the International Transfer of Environmental Technologies," MPRA Paper 6334, University Library of Munich, Germany, revised 20 Sep 2007.
  6. Azusa Itoh & Makoto Tawada, 2003. "Environment, trade and the welfare gains from the transfer of pollution abatement technology," Economics of Governance, Springer, vol. 82(4), pages 519-534, November.
  7. Yasuhiro Takarada, 2005. "Transboundary Pollution and the Welfare Effects of Technology Transfer," Journal of Economics, Springer, vol. 85(3), pages 251-275, 09.
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