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Technology spillovers and stability of international climate coalitions

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  • Miyuki Nagashima
  • Rob Dellink

Abstract

Cooperation in international environmental agreements appears difficult to attain because of strong free-riding incentives. This paper explores how different technology spillover mechanisms among regions can influence the incentive structures to join and stabilise an international agreement. We use an applied modelling framework (STACO) that enables us to investigate stability of partial climate coalitions. Technology spillovers to coalition members increase their incentives to stay in the coalition and reduce abatement costs, which leads to larger global payoffs and a lower global CO2 stock. Several theories on the impact of technology spillovers are evaluated by simulating a range of alternative specifications. We find that while spillovers are a good instrument to improve stability of bilateral agreements, they cannot overcome the strong free rider incentives that are present in larger coalitions. This conclusion is robust against the specification of technology spillovers.
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  • Miyuki Nagashima & Rob Dellink, 2008. "Technology spillovers and stability of international climate coalitions," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 343-365, December.
    • Handle: RePEc:spr:ieaple:v:8:y:2008:i:4:p:343-365
    DOI: 10.1007/s10784-008-9079-1
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    1. El-Sayed, Abeer & Rubio, Santiago J., 2014. "Sharing R&D investments in cleaner technologies to mitigate climate change," Resource and Energy Economics, Elsevier, vol. 38(C), pages 168-180.
    2. Richard Perkins & Eric Neumayer, 2009. "How do domestic attributes affect international spillovers of CO2-efficiency?," GRI Working Papers 8, Grantham Research Institute on Climate Change and the Environment.
    3. Leimbach, Marian & Baumstark, Lavinia, 2010. "The impact of capital trade and technological spillovers on climate policies," Ecological Economics, Elsevier, vol. 69(12), pages 2341-2355, October.
    4. Leo Wangler & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2013. "The political economy of international environmental agreements: a survey," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(3), pages 387-403, September.
    5. Richard Perkins & Eric Neumayer, 2012. "Do recipient country characteristics affect international spillovers of CO 2 -efficiency via trade and foreign direct investment?," Climatic Change, Springer, vol. 112(2), pages 469-491, May.
    6. Sferra, Fabio & Tavoni, Massimo, 2013. "Endogenous Participation in a Partial Climate Agreement with Open Entry: A Numerical Assessment," Climate Change and Sustainable Development 156486, Fondazione Eni Enrico Mattei (FEEM).
    7. Wei Jin, 2012. "International Knowledge Spillover and Technology Externality: Why Multilateral R&D Coordination Matters for Global Climate Governance," CAMA Working Papers 2012-53, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    8. Lessmann, Kai & Edenhofer, Ottmar, 2011. "Research cooperation and international standards in a model of coalition stability," Resource and Energy Economics, Elsevier, vol. 33(1), pages 36-54, January.
    9. Parrado, Ramiro & De Cian, Enrica, 2014. "Technology spillovers embodied in international trade: Intertemporal, regional and sectoral effects in a global CGE framework," Energy Economics, Elsevier, vol. 41(C), pages 76-89.
    10. Michael Hübler & Michael Finus, 2013. "Is the risk of North–South technology transfer failure an obstacle to a cooperative climate change agreement?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(4), pages 461-479, November.
    11. Enrica De Cian & Ramiro Parrado, 2012. "Technology Spillovers Embodied in International Trade: Intertemporal, regional and sectoral effects in a global CGE," Working Papers 2012.27, Fondazione Eni Enrico Mattei.
    12. Hoel, Michael & de Zeeuw, Aart, 2013. "Technology Agreements with Heterogeneous Countries," Memorandum 02/2013, Oslo University, Department of Economics.
    13. Holladay J. Scott & Livermore Michael A., 2013. "Regional variation, holdouts, and climate treaty negotiations," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(2), pages 131-157, August.
    14. Nicky R. M. Pouw & Hans-Peter Weikard & Richard B. Howarth, 2022. "Economic analysis of international environmental agreements: lessons learnt 2000–2020," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(2), pages 279-294, June.

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    More about this item

    Keywords

    Climate change modelling; International environmental agreements; Non-cooperative game theory; Technology spillovers;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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