Technology diffusion, abatement cost, and transboundary pollution

Geoffrey Heal () and Nori Tarui ()

No 200803, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper studies countries’ incentives to develop advanced pollution abatement technology when technology may spillover across countries and pollution abatement is a global public good. We are motivated in part by the problem of global warming: a solution to this involves providing a global public good, and will surely require the development and implementation of new technologies. We show that at the Nash equilibrium of a simultaneous-move game with R&D investment and emission abatement, whether the free rider effect prevails and under-investment and excess emissions occur depends on the degree of technology spillovers and the effect of R&D on the marginal abatement costs. There are cases in which, contrary to conventional wisdom, Nash equilibrium investments in emissions reductions exceed the first-best case.

Keywords: International environmental agreement; pollution abatement costs; endogenous technological change. (search for similar items in EconPapers)
JEL-codes: Q50 H87 D70 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-env
Date: 2008-10-01
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http://www.economics.hawaii.edu/research/workingpapers/WP_08-3.pdf First version, 2008 (application/pdf)

Related works:
Working Paper: Technology Diffusion, Abatement Cost, and Transboundary Pollution (2008)
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