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Norwegian

Climate Agreements and Technology Policy

Link to article:

[PDF]

Authors:

Golombek, Rolf and Michael Hoel

Year:

2004

Reference:

Memorandum
Number in series: 11

Summary

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.

JEL:

O30; H23; Q20; Q28; Q48

Keywords:

Climate policy, international environmental agreements, R&D Policy, technology spillovers.

Project:

Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.:
Frisch prosjekt: 3112 - Climate treaties and technological change

Financing:

Norges forskningsråd