Technological change and international interaction in environmental policies
Yuichi Furukawa () and
MPRA Paper from University Library of Munich, Germany
This paper considers the impact of differences in endogenous technological change between two countries on global pollution emissions under international strategic interaction in environmental policies. First, we demonstrate that an environmentally lagging country's technology may continue to advance through a learning-by-doing effect until it exceeds the environmental friendliness of a leading country that initially had the cleanest technology (i.e., environmental leapfrogging could occur). Whether a country eventually becomes an environmentally leading country depends on the country size and its awareness of environmental quality. Second, we find that global emissions fluctuate despite the fact that environmental technology advances in both countries. Global emissions eventually become constant because both countries cease to tighten environmental regulations when their technologies are sufficiently clean. The final emissions might be larger than emissions in early stages of adjustment under dirty technologies. If environmental leapfrogging frequently occurs, both countries possess similarly clean technologies, thereby reducing long-term global pollution.
Keywords: Environmental policy; leapfrogging; learning-by-doing; strategic interaction; technological change; transboundary pollution (search for similar items in EconPapers)
JEL-codes: O30 Q55 O33 O31 O44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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