Environmental Technology Transfer via Free Trade

Takeshi Iida and Kenji Takeuchi
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Takeshi Iida: Graduate School of Economics, Kobe University

No 904, Discussion Papers from 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.

Keywords: Environmental technology transfer; Free trade; Tariff protection, Licensing (search for similar items in EconPapers)
JEL-codes: D43 F13 L13 Q56 (search for similar items in EconPapers)
Pages: 20pages
Date: 2009-04
New Economics Papers: this item is included in nep-env and nep-res
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Citations: View citations in EconPapers (3)

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Journal Article: Environmental Technology Transfer via Free Trade (2010)
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