Can International Climate Cooperation Induce Knowledge Spillover to Developing Countries? Evidence from CDM

57 Pages Posted: 23 Dec 2020 Last revised: 2 May 2022

See all articles by Jingbo Cui

Jingbo Cui

Duke Kunshan University

Zhenxuan Wang

Duke University

Haishan Yu

Shanghai Jiao Tong University

Date Written: April 27, 2022

Abstract

Under the Kyoto Protocol, Clean Development Mechanism (CDM) is expected to facilitate the North-South knowledge spillovers for climate-friendly technologies. This paper examines the effects of this voluntary international climate cooperation on firm innovation and knowledge spillovers through the lens of CDM projects hosted in China. Using a matched Difference-in-Differences (DID) approach, we find that CDM projects contribute to firms' innovation quantity, quality, and direction in renewable energy and energy-efficient technologies. These results can be explained by a rich set of project heterogeneity, capturing the learning-by-doing effect, the induced-innovation incentives, and the economics of scale. Furthermore, we explore the role of foreign sponsors in knowledge spillovers, measured by patent citations from sponsoring countries to the host country. Our results suggest that sponsoring firms play a technology-supporting role by raising the innovation quantity and quality while sponsoring governments serve as an intermediary role by facilitating citation flows.

Keywords: CDM, Knowledge Spillovers, Patent, Renewable Energy

JEL Classification: O3, Q55, Q42

Suggested Citation

Cui, Jingbo and Wang, Zhenxuan and Yu, Haishan, Can International Climate Cooperation Induce Knowledge Spillover to Developing Countries? Evidence from CDM (April 27, 2022). Available at SSRN: https://ssrn.com/abstract=3668913 or http://dx.doi.org/10.2139/ssrn.3668913

Jingbo Cui (Contact Author)

Duke Kunshan University ( email )

No. 8 Duke Avenue
Kunshan, Jiangsu 215316
China

Zhenxuan Wang

Duke University ( email )

9 Curcuit Drive
Durham, NC 27705
United States

HOME PAGE: http://zhenxuanwang.org

Haishan Yu

Shanghai Jiao Tong University ( email )

China-UK Low Carbon College
Shanghai, Shanghai 201306
China

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