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Climate Policy with Technology Transfers and Permit Trading

Listed author(s):
  • Carsten Helm

    ()

    (Carl von Ossietzky Universität Oldenburg, Institut für Volkswirtschaftslehre & ZenTra)

  • Stefan Pichler

    ()

    (KOF Swiss Economic Institute, ETH Zürich)

In this paper, we analyze technology transfers (TT) and tradable emission rights, which are core is-sues of the ongoing climate negotiations. Subsidizing TT leads to the adoption of better abatement technologies in the South, thereby reducing the international permit price. This is beneficial for the North as long as it is a permit buyer; hence it chooses to subsidize TT. By contrast, the permit selling South suffers from the lower permit price and its welfare usually deteriorates, despite receiving subsidies. We also consider how TT affects countries’ non-cooperative choices of permit endowments and find that it tends to reduce overall emissions. Finally, a simple numerical simulation model illustrates the results and explores some further comparative statics.

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File URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2387293
File Function: First version, November 2013
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Paper provided by ZenTra - Center for Transnational Studies in its series ZenTra Working Papers in Transnational Studies with number 31 / 2014.

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Length: 24 pages
Date of creation: Jan 2014
Date of revision: Jan 2014
Handle: RePEc:zen:wpaper:31
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