Sharing R&D Investments in Cleaner Technologies to Mitigate Climate Change

42 Pages Posted: 24 May 2014

See all articles by Abeer El-Sayed

Abeer El-Sayed

University of Valencia

Santiago J. Rubio

University of Valencia - Department of Economic Analysis

Date Written: May 22, 2014

Abstract

This paper examines international cooperation on technological development as an alternative to international cooperation on GHG emission reductions. It is assumed that when countries cooperate they coordinate their investments so as to minimize the agreement costs of controlling emissions and that they also pool their R&D efforts so as to fully internalize the spillover effects of their investments in R&D. In order to analyze the scope of cooperation, an agreement formation game is solved in three stages. First, countries decide whether or not to sign the agreement. Then, in the second stage, signatories (playing together) and non-signatories (playing individually) select their investment in R&D. Finally, in the third stage, each country decides its level of emissions non-cooperatively. For linear environmental damages and quadratic investment costs, our findings show that the maximum participation in a R&D agreement consists of six countries and that participation decreases as the coalition information exchange decreases until a minimum participation consisting of three countries is reached. We also find that the grand coalition is stable if the countries sign an international research joint venture but in this case the effectiveness of the agreement is very low.

Keywords: International Environmental Agreements, R&D Investment, Technology Spillovers, Coalition Information Exchange, Research Joint Ventures

JEL Classification: D74, F53, H41, Q54, Q55

Suggested Citation

El-Sayed, Abeer and Rubio Jorge, Santiago J., Sharing R&D Investments in Cleaner Technologies to Mitigate Climate Change (May 22, 2014). FEEM Working Paper No. 41.2014. Available at SSRN: https://ssrn.com/abstract=2440679 or http://dx.doi.org/10.2139/ssrn.2440679

Abeer El-Sayed

University of Valencia ( email )

Avda. de los Naranjos s/n
Valencia, Valencia E-46022
Spain

Santiago J. Rubio Jorge (Contact Author)

University of Valencia - Department of Economic Analysis ( email )

Avda. de los Naranjos s/n
46022 Valencia
Spain
+34963828219 (Phone)
+34963828249 (Fax)

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