Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 21/2006: Climate agreements: emission quotas versus technology policies
Rolf Golombek () and Michael Hoel ()
Additional contact information
Rolf Golombek: The Ragnar Frisch Centre for Economic Research, Postal: Gaustadalleen 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: The Kyoto Agreement is the result of international negotiations over many years. However, because of a number of weaknesses, different sorts of climate agreement have been suggested: for example, coordinated R&D activities that reduce abatement costs for all firms. We will compare an agreement focusing only on emissions (a Kyoto type of agreement) with an agreement focusing only on technology, assuming that the costs of abatement are affected by R&D in all firms through technology spillovers. In an emissions agreement, emissions should be restricted to the extent that the carbon price exceeds the Pigovian level. For sufficiently low technology spillovers, an emissions agreement is more efficient than a technology agreement specifying an R&D subsidy to be imposed on all firms in all countries. The opposite may hold if technology spillovers are sufficiently large. Finally, an alternative technology agreement specifying R&D expenditure in each country is more efficient than an agreement specifying an R&D subsidy.
Keywords: climate policy; international climate agreements; R&D policy; technology spillovers
JEL-codes: H23; O30; Q20; Q28; Q48
34 pages, September 29, 2006
Full text files
Memo-21-2006.pdf
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