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Incentives to Diffuse Advanced Abatement Technology Under the Formation of International Environmental Agreements

Environmental and Resource Economics volume 56, pages 177–210 (2013)Cite this article

Abstract

We analyse the incentives for polluting firms to diffuse and adopt advanced abatement technology in a framework in which governments negotiate an international environmental agreement. These incentives crucially depend on whether the underlying environmental policy instrument is an emission tax or an emission quota. The results for the international setting fundamentally differ from those for the national setting that have been elaborated upon in the earlier literature. In particular, equilibrium diffusion and adoption of advanced abatement technology are not necessarily optimal under the tax regime and may be even lower than those under the quota regime.

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Authors and Affiliations

  1. Department of Economics, University of Hagen, Profilstr. 8, 58084, Hagen, Germany

    Alfred Endres & Bianca Rundshagen

  2. Department of Economics, University of Witten/Herdecke, Witten, Germany

    Alfred Endres

Authors
  1. Alfred Endres
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  2. Bianca Rundshagen
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Corresponding author

Correspondence to Bianca Rundshagen.

Additional information

The authors are indebted to three anonymous referees as well as Joanna Poyago-Theotoky, Robert Waschik (both at the Economics Department of La Trobe University, Melbourne) and Michael Faure, Maastricht University, Faculty of Law, for their helpful comments on an earlier draft of this paper. The manuscript was completely revised while Alfred Endres was a visiting scholar at La Trobe University. This author is indebted to the Economics Department for its hospitality and to the University of Hagen for granting a sabbatical.

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Endres, A., Rundshagen, B. Incentives to Diffuse Advanced Abatement Technology Under the Formation of International Environmental Agreements. Environ Resource Econ 56, 177–210 (2013). https://doi.org/10.1007/s10640-012-9596-9

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  • DOI: https://doi.org/10.1007/s10640-012-9596-9

Keywords

  • International environmental agreement
  • Induced technical change
  • Pollution abatement
  • Emission taxes
  • Emission quotas

JEL Classification

  • Q5