Sinking costs to increase participation: technology deployment agreements enhance climate cooperation

Johannes Urpelainen ()

Environmental Economics and Policy Studies, 2014, vol. 16, issue 3, 229-240

Abstract: The role of technology cooperation in international climate policy has drawn considerable attention in recent years. This article examines the possibility that an international agreement to deploy clean energy would pave the way to future climate cooperation. My game-theoretic analysis shows that even if technology deployment produces mostly private benefits for each country, an agreement can increase global pollution abatement efforts. If technology deployment allows countries to credibly commit to pollution abatement through sunk costs, the international community can form two coalitions. One deploys the technology and then abates pollution, whereas the other only abates pollution. A technology deployment agreement is useful and feasible when the total number of concerned countries is high and technology deployment is very costly but effective in reducing the cost of future pollution abatement. Copyright Springer Japan 2014

Keywords: Climate policy; Environmental agreements; Coalition formation; Clean technology (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s10018-013-0075-5

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