Environmental Technology Transfer via Free Trade
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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- 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.
- 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.
- 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.
- Yasuhiro Takarada, 2005. "Transboundary Pollution and the Welfare Effects of Technology Transfer," Journal of Economics, Springer, vol. 85(3), pages 251-275, 09.
- David Popp, 2008. "International Technology Transfer for Climate Policy," Center for Policy Research Policy Briefs 39, Center for Policy Research, Maxwell School, Syracuse University.
- Mukherjee, Arijit & Pennings, Enrico, 2006. "Tariffs, licensing and market structure," European Economic Review, Elsevier, vol. 50(7), pages 1699-1707, October.
- 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.
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