nep-res New Economics Papers
on Resource Economics
Issue of 2014‒10‒03
two papers chosen by
Maximo Rossi
Universidad de la República

  1. Self-enforcing international environmental agreements and trade: taxes versus caps By Thomas Eichner; Rüdiger Pethig
  2. Environmental R&D in the Presence of an Eco-Industry By Alain-Désiré Nimubona; Hassan Benchekroun

  1. By: Thomas Eichner; Rüdiger Pethig
    Abstract: This paper studies within a multi-country model with international trade the stability of international environmental agreements (IEAs) when countries regulate carbon emissions either by taxes or caps. Regardless of whether coalitions play Nash or are Stackelberg leaders the principal message is that the choice of caps or taxes matters. International trade and tax regulation are necessary conditions for the existence of the encompassing self-enforcing IEA, and that the latter is attained the more likely, the less severe the climate damage. Hence, cap regulation is inferior to tax regulation insofar as in case of the former there exist no large and effective self-enforcing IEAs, in particular not the encompassing self-enforcing IEA. Further results are that for the formation of encompassing self-enforcing IEAs it does not matter whether climate coalitions play Nash or are Stackelberg leaders or whether fossil fuel is modeled as a consumer good or an intermediate good.
    Keywords: cap, tax, international trade, self-enforcing environmental agreements, Nash, Stackelberg
    JEL: C72 F02 Q50 Q58
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:sie:siegen:165-14&r=res
  2. By: Alain-Désiré Nimubona (Department of Economics, University of Waterloo); Hassan Benchekroun (Department of Economics, McGill University)
    Abstract: We compare the performance of R&D cooperation and R&D competition within the eco-industry using a model of vertical relationship between a polluting industry and the eco-industry. The polluting industry is assumed perfectly competitive and the eco-industry is a duopoly in the market for abatement goods and services, with one fi?rm acting as a Stackelberg leader and the other fi?rm as a follower. When there are full information sharing under R&D cooperation and involuntary information leakages under R&D competition, we ?find that the only case where government intervention is needed is the case where R&D cooperation yields a higher welfare but smaller pro?fits for the follower eco-industrial fi?rm than R&D competition. Furthermore, because of the market power that the eco-industry enjoys, we show that more total R&D efforts under R&D competition do not necessarily translate into more abatement activities and larger social welfare. When there are no involuntary leakages of information under R&D competition, this result occurs because R&D competition can induce more total R&D efforts than R&D cooperation even for signi?ficantly high R&D spillovers if the marginal environmental damage is large.
    JEL: L13 O32 Q55 Q58
    Date: 2014–09
    URL: http://d.repec.org/n?u=RePEc:wat:wpaper:1406&r=res

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