Technology Agreements with Heterogeneous Countries

Abstract

For sufficiently low abatement costs many countries might undertake significant emission reductions even without any international agreement on emission reductions. We consider a situation where a coalition of countries does not cooperate on emission reductions but cooperates on the development of new, climate friendly technologies that reduce the costs of abatement. The equilibrium size of such a coalition, as well as equilibrium emissions, depends on the distribution across countries of their willingness to pay for emission reductions. Increased willingness to pay for emissions reductions for any group of countries will reduce (or leave unchanged) the equilibrium coalition size. However, the effect of such an increase in aggregate willingness to pay on equilibrium emissions is ambiguous.

Transboundary Pollution, Clean Technologies and International Environmental Agreements

“…The intuition behind this result is similar to the one behind the 'voracity e¤ect' in[40] and[41], obtained in the context of growth under weak or absent property rights 10. The values used for x in the existing literature range from 30% (see[42]) to about 5% (see[43]).…”

“…Table 3 provides the payo¤s of insiders and outsiders for each coalition size, m; under the cleaner technology at = 0:1. as concluded by [7], unless the adoption of cleaner technology has increasing returns due to network externalities, or if the cost of adoption declines in the level of R&D, as pointed out by [9]. [10] conclude that if countries are asymmetric, those facing higher marginal damage from the pollutant have more incentive to cooperate on R&D, which reduces cost of adoption of the cleaner technology for all countries leading to an increase in global welfare.…”

“…The …rst category includes [7], [8], [9] and [10]. [7] considers a sequence of treaties: the …rst on cooperative R&D, and the second on collective adoption among the signatories of a breakthrough technology that causes emission of the transboundary pollutant to decrease discretely, emerging from the R&D undertaken in the …rst stage.…”

Evolution of Reciprocity in Asymmetric International Environmental Negotiations

“…If the technological progress becomes generally available, technology agreements may indeed improve the situation but the full-cooperative outcome is not guaranteed (e.g. Hoel and de Zeeuw (2013)). Leadership may be another option.…”