'The Voracity Effect' and Climate Change: The Impact of Clean Technologies
33 Pages Posted: 9 Feb 2011
Date Written: February 7, 2011
We show that a technological breakthrough that reduces CO2 emissions per output can exacerbate the climate change problem: countries may respond by raising their emissions resulting in an increase of the stock of pollution that may reduce welfare. Using parameter values based on empirical evidence we obtain that any 'new technology' that reduces the emissions of CO2 per dollar of GDP by less than 76% from their current level is welfare reducing. Developing clean technologies as well as transferring “cleaner” technologies to developing countries make a global post-Kyoto agreement over the control of emissions all the more urgent.
Keywords: Transboundary Pollution, Renewable Resource, Climate Change, Clean Technologies, Differential Games
JEL Classification: Q20, Q54, Q55, Q58, C73
Suggested Citation: Suggested Citation