Working Paper: CEPR ID: DP4412
Authors: Barbara Buchner; Carlo Carraro
Abstract: This Paper provides a first applied game theory analysis of a technology-based climate protocol by assessing: (i) the self-enforcement (namely, the absence of incentives to free ride) of the coalition that would form when countries negotiate on climate-related technological cooperation; (ii) the environmental effectiveness of a technology-based climate protocol. The analysis is carried out using a model in which endogenous and induced technical changes are explicitly modelled and in which international technological spillovers are also quantified. The results of our analysis partly support Barrett?s and Benedick?s conjecture. On the one hand, a self-enforcing agreement is more likely to emerge when countries cooperate on environmental technological innovation and diffusion than when they cooperate on emission abatement. Technological cooperation ? without any commitment to emission control ? may not lead to a sufficient abatement of greenhouse gas concentrations, however.
Keywords: agreements; climate; incentives; policy; technological change
JEL Codes: C70; H00; H40; O30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technological cooperation (O30) | Increased economic growth (O49) |
| Increased economic growth (O49) | Increased greenhouse gas emissions (F64) |
| Technological cooperation (O30) | Increased greenhouse gas emissions (F64) |
| Self-enforcing agreement on technological cooperation is more likely to emerge than one focused solely on emission abatement (F13) | Increased greenhouse gas emissions (F64) |
| Technological cooperation can reduce emissions per unit of output (O49) | Increased total greenhouse gas emissions (Q54) |
| Technology-based climate protocol does not effectively reduce total greenhouse gas emissions (Q54) | Additional environmental policy measures necessary (Q58) |