TECHNOLOGY DEVELOPMENT AND DIFFUSION AND INCENTIVES TO ABATE GREENHOUSE GAS EMISSIONS

Richard S.J. Tol (), Wietze Lise, Benoit Morel and Bob van der Zwaan

No FNU-6, Working Papers from Research unit Sustainability and Global Change, Hamburg University

Abstract: More technology implies higher welfare. Therefore, it is individually rational to cooperate on technological development. It is not individually rational cooperate on greenhouse gas emission reduction. If technology cooperation only comes with cooperation on emission reduction, incentives to free ride on the emission reduction agreement are reduced. However, countries would prefer to cooperate on technology but not on emission reduction. If technology progresses through a learning-by-doing mechanism, more emission reduction technology does not necessarily imply higher emission reduction. However, for reasonable parameter choices, it does. This implies that technological cooperation is an effective instrument in emission reduction policy, also if that policy is of a non-cooperative nature. It also implies that it is in the best interest of technology leaders to subsidise the export of greenhouse gas reducing technology.

Keywords: Climate change; greenhouse gas emission reduction; endogenous technological change; learningby- doing; optimal emission control; coalition formation (search for similar items in EconPapers)
JEL-codes: C71 C72 Q54 (search for similar items in EconPapers)
Date: 2001-02, Revised 2001-02
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