Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 11/2004: Climate Agreements and Technology Policy

Rolf Golombek () and Michael Hoel ()
Additional contact information
Rolf Golombek: The Ragnar Frisch Centre for Economic Research, Postal: Gaustadalléen 21, N-0349 Oslo, Norway
Michael Hoel: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

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

JEL-codes: H23; O30; Q20; Q28; Q48

38 pages, October 26, 2004

Full text files 

Memo-11-2004.pdf PDF-file

Download statistics

Questions (including download problems) about the papers in this series should be directed to Mari Strønstad Øverås ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:osloec:2004_011This page generated on 2024-09-13 22:16:44.