2023/11/02 by Francisco J André, Francisco J. André, Michael Finus
Economics, Econometrics and Finance · #Climate Change Policy and Economics #Economic Policies and Impacts #Energy, Environment, Economic Growth
paper · pdf · doi:10.1093/oep/gpad047
Abstract We consider an endogenous learning-by-doing process where countries can invest in research that reduces the systematic uncertainty about climate change damages. We analyse a coalition model in which countries decide whether to join a treaty and then choose their level of research and abatement. Countries can cooperate on research and abatement or only on one of these items. We consider the entire range of possible research spillovers. Cooperation on all issues and large research spillovers are generally welfare improving, but lead to smaller coalitions, as they encourage free-riding. However, on balance, in equilibrium, we find that cooperation should not be confined to research and should include abatement, and research findings should freely travel.