IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/42467.html
   My bibliography  Save this paper

Timing of adoption of clean technologies, transboundary pollution and international trade

Author

Listed:
  • Ben Jebli, Mehdi
  • Ben Youssef, Slim

Abstract

We consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology that uses fossil energy. However, these firms can adopt a clean technology that uses a renewable energy and that has a lower unit cost. Surprisingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. Interestingly, the socially-optimal adoption date under a common market better internalizes transboundary pollution than that under autarky, and than the optimal adoption date of regulated firms. However, the optimal adoption date of non-regulated firms completely don't internalize transboundary pollution. In autarky (resp. a common market), regulated firms adopt earlier (resp. later) than what is socially-optimal, whereas non-regulated firms adopt later than the socially-optimal adoption date and than the optimal adoption date of regulated firms. Therefore, in autarky (resp. a common market) regulators can induce firms to adopt at the socially-optimal adoption date by giving them postpone ( resp. speed up) adoption subsidies. Opening markets to international trade, speeds up the socially-optimal adoption date and delays optimal adoption dates of regulated and non-regulated firms.

Suggested Citation

  • Ben Jebli, Mehdi & Ben Youssef, Slim, 2012. "Timing of adoption of clean technologies, transboundary pollution and international trade," MPRA Paper 42467, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42467
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/42467/1/MPRA_paper_42467.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dutta, Prajit K & Lach, Saul & Rustichini, Aldo, 1995. "Better Late Than Early: Vertical Differentiation in the Adoption of a New Technology," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(4), pages 563-589, Winter.
    2. Carolyn Fischer & Cees Withagen & Michael Toman, 2004. "Optimal Investment in Clean Production Capacity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(3), pages 325-345, July.
    3. Parkash Chander & Henry Tulkens, 2006. "Theoretical Foundations of Negotiations and Cost Sharing in Transfrontier Pollution Problems," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 123-134, Springer.
    4. Whitehead, John C. & Cherry, Todd L., 2007. "Willingness to pay for a Green Energy program: A comparison of ex-ante and ex-post hypothetical bias mitigation approaches," Resource and Energy Economics, Elsevier, vol. 29(4), pages 247-261, November.
    5. Cesare Dosi & Michele Moretto, 2010. "Environmental Innovation, War Of Attrition And Investment Grants," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 12(01), pages 37-59.
    6. Slim Ben Youssef, 2009. "Transboundary pollution, R&D spillovers and international trade," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 235-250, March.
    7. Milliou, Chrysovalantou & Petrakis, Emmanuel, 2011. "Timing of technology adoption and product market competition," International Journal of Industrial Organization, Elsevier, vol. 29(5), pages 513-523, September.
    8. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-737, September.
    9. Jennifer F. Reinganum, 1981. "On the Diffusion of New Technology: A Game Theoretic Approach," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(3), pages 395-405.
    10. Cesare Dosi & Michele Moretto, 1997. "Pollution Accumulation and Firm Incentives to Accelerate Technological Change Under Uncertain Private Benefits," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 285-300, October.
    11. Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(3), pages 383-401.
    12. Hoel, Michael, 1997. "Coordination of environmental policy for transboundary environmental problems?," Journal of Public Economics, Elsevier, vol. 66(2), pages 199-224, November.
    13. Reichenbach, Johanna & Requate, Till, 2012. "Subsidies for renewable energies in the presence of learning effects and market power," Resource and Energy Economics, Elsevier, vol. 34(2), pages 236-254.
    14. Michael H. Riordan, 1992. "Regulation and Preemptive Technology Adoption," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 334-349, Autumn.
    15. van Soest, Daan P., 2005. "The impact of environmental policy instruments on the timing of adoption of energy-saving technologies," Resource and Energy Economics, Elsevier, vol. 27(3), pages 235-247, October.
    16. Fujiwara, Kenji, 2011. "Losses from competition in a dynamic game model of a renewable resource oligopoly," Resource and Energy Economics, Elsevier, vol. 33(1), pages 1-11, January.
    17. Isabelle Péchoux & Jérôme Pouyet, 2003. "Regulated Firms with Transboundary Pollution: Does International Competition Improve Efficiency?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(3), pages 499-525, July.
    18. Zagonari, Fabio, 1998. "International Pollution Problems: Unilateral Initiatives by Environmental Groups in One Country," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 46-69, July.
    19. Pillai, Indu R. & Banerjee, Rangan, 2009. "Renewable energy in India: Status and potential," Energy, Elsevier, vol. 34(8), pages 970-980.
    20. Ben Youssef, Slim, 2010. "Adoption of a clean technology using a renewable energy," MPRA Paper 25576, University Library of Munich, Germany.
    21. Cremer, Helmuth & Gahvari, Firouz, 2004. "Environmental taxation, tax competition, and harmonization," Journal of Urban Economics, Elsevier, vol. 55(1), pages 21-45, January.
    22. Franz Wirl & Cees Withagen, 2000. "Complexities due to sluggish expansion of backstop technologies," Journal of Economics, Springer, vol. 72(2), pages 153-174, June.
    23. repec:bla:jpbect:v:2:y:2000:i:3:p:365-88 is not listed on IDEAS
    24. Li, Hui & Jenkins-Smith, Hank C. & Silva, Carol L. & Berrens, Robert P. & Herron, Kerry G., 2009. "Public support for reducing US reliance on fossil fuels: Investigating household willingness-to-pay for energy research and development," Ecological Economics, Elsevier, vol. 68(3), pages 731-742, January.
    25. Hoppe, Heidrun C., 2000. "Second-mover advantages in the strategic adoption of new technology under uncertainty," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 315-338, February.
    26. Varun & Prakash, Ravi & Bhat, Inder Krishnan, 2009. "Energy, economics and environmental impacts of renewable energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(9), pages 2716-2721, December.
    27. Faysal Mansouri & Slim Ben Youssef, 2000. "Regulation and Coordination of International Environmental Externalities with Incomplete Information and Costly Public Funds," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(3), pages 365-388, July.
    28. Caspary, Georg, 2009. "Gauging the future competitiveness of renewable energy in Colombia," Energy Economics, Elsevier, vol. 31(3), pages 443-449, May.
    29. Ben Youssef, Slim, 2009. "Transboundary Pollution and Absorptive Capacity," MPRA Paper 17158, University Library of Munich, Germany.
    30. Nasiri, Fuzhan & Zaccour, Georges, 2009. "An exploratory game-theoretic analysis of biomass electricity generation supply chain," Energy Policy, Elsevier, vol. 37(11), pages 4514-4522, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ben Jebli, Mehdi & Ben Youssef, Slim & Apergis, Nicholas, 2014. "The dynamic interaction between combustible renewables and waste consumption and international tourism: The case of Tunisia," MPRA Paper 59827, University Library of Munich, Germany.
    2. Jiang, Shaohua & Mentel, Grzegorz & Shahzadi, Irum & Ben Jebli, Mehdi & Iqbal, Najaf, 2022. "Renewable energy, trade diversification and environmental footprints: Evidence for Asia-Pacific Economic Cooperation (APEC)," Renewable Energy, Elsevier, vol. 187(C), pages 874-886.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Slim Ben Youssef, 2015. "Timing of Adoption of Clean Technologies by Regulated Monopolies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(1), pages 77-92, March.
    2. Slim Ben Youssef, 2015. "Timing of Adoption of Clean Technologies by Regulated Monopolies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(1), pages 77-92.
    3. Ben Youssef, Slim, 2010. "Adoption of a clean technology using a renewable energy," MPRA Paper 25576, University Library of Munich, Germany.
    4. Alberto Galasso & Mihkel Tombak, 2014. "Switching to Green: The Timing of Socially Responsible Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 669-691, September.
    5. Smirnov, Vladimir & Wait, Andrew, 2021. "Preemption with a second-mover advantage," Games and Economic Behavior, Elsevier, vol. 129(C), pages 294-309.
    6. Bobtcheff, Catherine & Mariotti, Thomas, 2012. "Potential competition in preemption games," Games and Economic Behavior, Elsevier, vol. 75(1), pages 53-66.
    7. Smirnov, Vladimir & Wait, Andrew, 2018. "Blocking in a timing game with asymmetric players," Working Papers 2018-05, University of Sydney, School of Economics, revised May 2019.
    8. Sun, Chia-Hung, 2023. "Timing of technology adoption in the presence of patent licensing," Economic Modelling, Elsevier, vol. 127(C).
    9. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.
    10. Femminis Gianluca & Martini Gianmaria, 2010. "First-Mover Advantage in a Dynamic Duopoly with Spillover," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-46, November.
    11. Milliou, Chrysovalantou & Petrakis, Emmanuel, 2011. "Timing of technology adoption and product market competition," International Journal of Industrial Organization, Elsevier, vol. 29(5), pages 513-523, September.
    12. Maria Alipranti & Emmanuel Petrakis, 2022. "Upstream market structure and the timing of technology adoption," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1298-1310, July.
    13. Ben Youssef, Slim, 2009. "Transboundary Pollution and Absorptive Capacity," MPRA Paper 17158, University Library of Munich, Germany.
    14. Hoppe, Heidrun C., 2000. "Second-mover advantages in the strategic adoption of new technology under uncertainty," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 315-338, February.
    15. Zeineb Dinar, 2014. "Transboundary Pollution, R&D Spillovers, Absorptive Capacity and International Trade," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 501-513.
    16. Sun Chia-Hung, 2020. "Timing of Adopting a Flexible Manufacturing System and Product Differentiation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(2), pages 1-17, April.
    17. Benoit Voudon, 2019. "Technology Adoption under Asymmetric Market Structure," Trinity Economics Papers tep0819, Trinity College Dublin, Department of Economics.
    18. Femminis, Gianluca & Martini, Gianmaria, 2011. "Irreversible investment and R&D spillovers in a dynamic duopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 35(7), pages 1061-1090, July.
    19. Emanuele Bacchiega & Jean J. Gabszewicz & Ornella Tarola, 2007. "Time‐to‐market in vertically differentiated industries," International Journal of Economic Theory, The International Society for Economic Theory, vol. 3(4), pages 279-295, December.
    20. Peter M. Kort & Ruslan Lukach & Joseph Plasmans, 2007. "Strategic R&D with Knowledge Spillovers and Endogenous Time to Complete," CESifo Working Paper Series 2027, CESifo.

    More about this item

    Keywords

    Regulation; Adoption date; Renewable energy; Transboundary pollution; Common market;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:42467. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.