Environmental and Resource Economics

, Volume 49, Issue 4, pp 473–490 | Cite as

International Cooperation on Climate-friendly Technologies

Open Access
Article

Abstract

We examine international cooperation on technological development as an alternative to international cooperation on emission reductions. We show that without any R&D cooperation, R&D in each country should be increased beyond the non-cooperative level if (i) the technology level in one country is positively affected by R&D in other countries, (ii) the domestic carbon tax is lower than the Pigovian level, or (iii) the domestic carbon tax is set directly through an international tax agreement. We also show that a second-best technology agreement has higher R&D, higher emissions, or both compared with the first-best-outcome. The second-best subsidy always exceeds the subsidy under no international R&D cooperation. Further, when the price of carbon is the same in the second-best technology agreement and in the case without R&D cooperation, welfare is highest, R&D is highest and emissions are lowest in the second-best R&D agreement.

Keywords

Climate policy International climate agreements R&D policy Technology spillovers 

JEL Classification

H23 O30 Q20 Q38 Q48 Q54 

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Copyright information

© The Author(s) 2011

Authors and Affiliations

  1. 1.Frisch CentreOsloNorway
  2. 2.Department of EconomicsUniversity of OsloBlindern, OsloNorway

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