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Ross A. Mohr Graduate Student Department of Economics University of California, Santa Barbara
Email: mohr@econ.ucsb.edu
WORKING PAPER
“International Environmental Agreements with Cooperative Research & Development”
This paper builds on a standard, linear model of International Environmental Agreements by allowing countries to invest in abatement cost-reducing Research & Development (R&D). This paper also considers two different cooperation regimes: pollution abatement and R&D investment can either be provided independently with two separate agreements, or countries may choose to negotiate provision of both goods in a single, joint agreement. I show that when the joint treaty achieves a high enough level of participation, which implies a threshold amount of R&D investment, even non-signatories find it individually rational to abate pollution. That is, the resulting technology lowers the cost of pollution abatement enough so that the behavior of non-signatories tips toward the full cooperative outcome for pollution abatement, eliminating the incentive to free-ride. In this case, a joint agreement for cooperation on the environment and R&D increases pollution abatement and aggregate welfare. |
