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

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  • 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
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    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.

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    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

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