Climate Change and Breakthrough Technologies: The Role of Markets

Armando Zavaleta ()
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Armando Zavaleta: The University of Iowa

Environmental & Resource Economics, 2016, vol. 64, issue 4, No 4, 597-617

Abstract: Abstract I analyze whether self-enforcing international technological agreements to develop and adopt a breakthrough technology can greatly improve aggregate welfare if an international market for the technology is created. I assume that the technology is a private international good and countries can form two international consortiums: (1) a producing consortium that chooses whether to develop, adopt and sell the technology and (2) a consuming consortium that chooses whether to buy and adopt the technology. The ownership of the technology allows the creation of a market system that can solve the free-rider problem. I show that if the producing consortium has the bargaining power, the technology can always be developed and fully adopted and all gains from cooperation can be realized. If the bargaining power is shared between the consortiums, the aggregate welfare greatly improves and the technology can almost be fully adopted when the gains are sufficiently large.

Keywords: International environmental agreements; Game theory; Breakthrough technology; International market; Climate change (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10640-015-9889-x

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