Climate Agreements and Technology Policy

Rolf Golombek and Michael Hoel ()

No 11/2004, Memorandum from Oslo University, Department of Economics

Abstract: We study climate policy when there are technology spillovers within and across countries, and the technology externalities within each country are corrected through a domestic subsidy of R&D investments. We compare the properties of international climate agreements when the inter-country externalities from R&D are not regulated through the climate agreement. With an international agreement controlling abatements directly through emission quotas, the equilibrium R&D subsidy is lower that the socially optimal subsidy.The equilibrium subsidy is even lower if the climate agreement does not specify emission levels directly, but instead imposes a common carbon tax.Social costs are higher under a tax agreement than under a quota agreement.Moreover, for a reasonable assumption on the abatement cost function, R&D investments and abatement levels are lower under a tax agreement than under a quota agreement. Total emissions may be higher or lower in a second-best optimal quota agreement than in the first-best optimum.

Keywords: Climate policy; international environmental agreements; R&D Policy; technology spillovers (search for similar items in EconPapers)
JEL-codes: H23 O30 Q20 Q28 Q48 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2004-10-26
New Economics Papers: this item is included in nep-ino and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Climate Agreements and Technology Policy (2004)
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