Initial Payment and Refunding Scheme for Climate Change Mitigation and Technological Development Among Heterogeneous Countries

Takashima Nobuyuki ()
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Takashima Nobuyuki: School of Economics, 12803 Hiroshima University , 1-2-1 Kagamiyama, Higashi-Hiroshima 739-8525, Japan

The B.E. Journal of Economic Analysis & Policy, 2024, vol. 24, issue 3, 975-997

Abstract: We examine international environmental agreements (IEAs) in which heterogeneous countries work together to not only participate in the abatement of greenhouse gas emissions but also develop breakthrough technologies. In this paper, the country with the most advanced technology (i.e. the technological leader) develops a new abatement technology and distributes it to other countries (i.e. technological laggards) through licensing. We design a new mechanism to achieve cooperation among heterogeneous countries through an initial payment and refunding (IPR) scheme and licensing involving third-party organizations (TPOs). Under our new IPR scheme with licensing, the cost incurred by a technology leader in developing new technology is covered by licensing fees using a portion of the initial payments collected from technological laggards by a TPO. As a result, TPOs sustain IEAs by flexibly adjusting technological laggards’ share of costs for licensing, comprising initial payments and refunds, and the amount of the licensing payment made to the technological leader.

Keywords: international environmental agreements; technological development; third-party organizations; initial payment and refunding; licensing; heterogeneous countries (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejeap-2023-0382

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