'The Voracity Effect' and Climate Change: The Impact of Clean Technologies
McGill University - Department of Economics
Amrita Ray Chaudhuri
University of Winnipeg - Department of Economics; Tilburg University - Center and Faculty of Economics and Business Administration; Tilburg Law and Economics Center (TILEC)
September 1, 2010
CentER Discussion Paper Series No. 2009-23
TILEC Discussion Paper No. 2009-014
In the absence of a successful international cooperative agreement over the control of emissions there is a growing interest in the role that clean technologies may play to alleviate the climate change problem. Within a non-cooperative transboundary pollution game, we investigate, analytically and within a numerical example based on empirical evidence, the impact of the adoption of a cleaner technology (i.e., a decrease in the emission to output ratio). We show that countries may respond by increasing their emissions resulting in an increase in the stock of pollution that may be detrimental to welfare. This possibility is shown to arise for a significant and empirically relevant range of parameters. It is when the damage and/or the initial stock of pollution are relatively large and when the natural rate of decay of pollution is relatively small that the perverse effect of clean technologies is strongest. Cooperation over the control of emissions is necessary to ensure that the development of cleaner technologies does not exacerbate the free riding behavior that is at the origin of the climate change problem.
Number of Pages in PDF File: 29
Keywords: transboundary pollution, renewable resource, climate change, clean technologies, differential games
JEL Classification: Q20, Q54, Q55, Q58, C73working papers series
Date posted: April 6, 2009 ; Last revised: May 8, 2013
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