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Environmental Technology Transfer via Free Trade

Author

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  • Takeshi Iida

    (Graduate School of Economics, Kobe University)

  • Kenji Takeuchi

    () (Graduate School of Economics, Kobe University)

Abstract

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.

Suggested Citation

  • Takeshi Iida & Kenji Takeuchi, 2009. "Environmental Technology Transfer via Free Trade," Discussion Papers 0904, Graduate School of Economics, Kobe University.
  • Handle: RePEc:koe:wpaper:0904
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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2009/0904.pdf
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    References listed on IDEAS

    as
    1. 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.
    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;Regional Science Association International, 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. Mukherjee, Arijit & Pennings, Enrico, 2006. "Tariffs, licensing and market structure," European Economic Review, Elsevier, vol. 50(7), pages 1699-1707, October.
    7. Yasuhiro Takarada, 2005. "Transboundary Pollution and the Welfare Effects of Technology Transfer," Journal of Economics, Springer, vol. 85(3), pages 251-275, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Akira Miyaoka, 2014. "Environmental technology transfer in a Cournot duopoly: the case of fixed-fee licensing," Economics Bulletin, AccessEcon, vol. 34(4), pages 2253-2266.
    2. Takeshi Iida & Kenji Takeuchi, 2011. "Does free trade promote environmental technology transfer?," Journal of Economics, Springer, vol. 104(2), pages 159-190, October.
    3. Takao Asano & Noriaki Matsushima, 2014. "Environmental regulation and technology transfers," Canadian Journal of Economics, Canadian Economics Association, vol. 47(3), pages 889-904, August.
    4. Takeshi Iida & Kenji Takeuchi, 2010. "Policy-Induced Environmental Technology Transfer," Discussion Papers 1008, Graduate School of Economics, Kobe University.
    5. Akira Miyaoka, 2014. "Environmental Technology Transfer in a Cournot Duopoly: The Case of Fixed-Fee Licensing," Discussion Papers in Economics and Business 14-08, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

    More about this item

    Keywords

    Environmental technology transfer; Free trade; Tariff protection; Licensing;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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