The Incentives to North-South Transfer of Climate-Mitigation Technologies with Trade in Polluting Goods

CER-ETH – Center of Economic Research at ETH Zurich, Working Paper 16/242

34 Pages Posted: 4 Apr 2016

See all articles by Matthieu Glachant

Matthieu Glachant

MINES ParisTech

Julie Ing

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Jean Philippe Nicolai

ETH Zürich

Date Written: April 4, 2016

Abstract

The need to transfer climate mitigation technologies towards the developing world has been acknowledged since the beginning of climate negotiations. Little progress has however been made as shown by Article 10 of the Paris Agreement. One reason is that these technologies could become vital assets to compete on global markets. This paper presents a partial equilibrium model with two regions, the North and the South, and imperfect competition in the international polluting goods market to analyze the North’s incentives to accept technology transfer. Results crucially depend on the existence of environmental cooperation. When both northern and southern governments set emission quotas non-cooperatively, inducing fewer global emissions is a necessary, but not sufficient condition for the North to accept the transfer. In contrast, when governments set quotas cooperatively, the North never accepts the transfer because it only leads to a partial relocation of pollutant goods production to the South. We derive the implications for the global regulation of climate change.

Keywords: Technology transfer, Imperfect competition, Climate policy, Environmental cooperation, Cap and trade

JEL Classification: D43, F18, Q5

Suggested Citation

Glachant, Matthieu and Ing, Julie and Nicolai, Jean Philippe, The Incentives to North-South Transfer of Climate-Mitigation Technologies with Trade in Polluting Goods (April 4, 2016). CER-ETH – Center of Economic Research at ETH Zurich, Working Paper 16/242 . Available at SSRN: https://ssrn.com/abstract=2758545 or http://dx.doi.org/10.2139/ssrn.2758545

Matthieu Glachant

MINES ParisTech ( email )

60, boulevard Saint Michel
75272 Paris cedex 06, 75006
France
+33 1 40 51 9229 (Phone)

Julie Ing

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

Jean Philippe Nicolai (Contact Author)

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

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