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Technology diffusion, abatement cost, and transboundary pollution

Author

Listed:
  • Geoffrey Heal

    (Graduate School of Business, Columbia University)

  • Nori Tarui

    (Department of Economics, University of Hawaii at Manoa)

Abstract

This paper studies countries’ incentives to develop advanced pollution abatement technology when technology may spillover across countries and pollution abatement is a global public good. We are motivated in part by the problem of global warming: a solution to this involves providing a global public good, and will surely require the development and implementation of new technologies. We show that at the Nash equilibrium of a simultaneous-move game with R&D investment and emission abatement, whether the free rider effect prevails and under-investment and excess emissions occur depends on the degree of technology spillovers and the effect of R&D on the marginal abatement costs. There are cases in which, contrary to conventional wisdom, Nash equilibrium investments in emissions reductions exceed the first-best case.

Suggested Citation

  • Geoffrey Heal & Nori Tarui, 2008. "Technology diffusion, abatement cost, and transboundary pollution," Working Papers 200803, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:200803
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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_08-3.pdf
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    References listed on IDEAS

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    Cited by:

    1. Bertinelli, Luisito & Camacho, Carmen & Zou, Benteng, 2014. "Carbon capture and storage and transboundary pollution: A differential game approach," European Journal of Operational Research, Elsevier, vol. 237(2), pages 721-728.

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    More about this item

    Keywords

    International environmental agreement; pollution abatement costs; endogenous technological change.;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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