Abstract
Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements.
| Original language | English |
|---|---|
| Number of pages | 25 |
| Journal | Journal of Environmental Economics and Management |
| DOIs | |
| Publication status | Accepted/In press - 2019 |
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Keywords
- Carbon pricing
- Feedback Nash equilibrium
- Global warming
- International cooperation
- Non-cooperative policies
- Renewable R&D
- Tipping point
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Non-cooperative and cooperative climate policies with anticipated breakthrough technology. / Jaakkola, Niko; van der Ploeg, Frederick.
In: Journal of Environmental Economics and Management, 2019.Research output: Contribution to Journal › Article › Academic › peer-review
TY - JOUR
T1 - Non-cooperative and cooperative climate policies with anticipated breakthrough technology
AU - Jaakkola, Niko
AU - van der Ploeg, Frederick
PY - 2019
Y1 - 2019
N2 - Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements.
AB - Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements.
KW - Carbon pricing
KW - Feedback Nash equilibrium
KW - Global warming
KW - International cooperation
KW - Non-cooperative policies
KW - Renewable R&D
KW - Tipping point
UR - http://www.scopus.com/inward/record.url?scp=85046773477&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85046773477&partnerID=8YFLogxK
U2 - 10.1016/j.jeem.2018.04.001
DO - 10.1016/j.jeem.2018.04.001
M3 - Article
JO - Journal of Environmental Economics and Management
JF - Journal of Environmental Economics and Management
SN - 0095-0696
ER -