Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 05/2005: The Kyoto agreement and Technology Spillovers
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: A significant reduction in global greenhouse gas emissions will require development of new technologies if such reductions are to be achieved without excessive costs. An important question is whether an agreement of the Kyoto type, which does not include elements related to research and development (R&D) of new technologies, will give sufficient incentives to develop such new technologies. On the one hand, since greenhouse gas emissions will become costly for countries and private producers, countries and individual producers will have incentives to undertake effort and costs to develop new technologies. On the other hand, R&D in one country is not only advantageous for this country, but usually also for other countries. The reason for this is that producers in these countries in many cases will learn from the R&D project, for example, through(informal) networks, journals, and in some cases through the import of goods from the country where the new technology is developed. The purpose of the paper is to discuss properties of an international climate agreement of the Kyoto type when R&D investments undertaken in one country are beneficial also for other countries. We examine whether a Kyoto type of agreement can provide the correct social amount of aggregate emissions and R&D investments in new technologies. We argue that the outcome of a Kyoto type agreement will differ from the social optimum. In particular, for a given level of abatement a Kyoto type agreement provides too little R&D investments relative to the social optimum.
Keywords: Climate policy; Kyoto; international environmental agreements; R&D; technology spillovers.
22 pages, April 6, 2005
Full text files
Memo-05-2005.pdf
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