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Environmental and Resource Economics

, Volume 62, Issue 3, pp 521–547 | Cite as

On the Timing of Climate Agreements

  • Robert C. SchmidtEmail author
  • Roland Strausz
Article

Abstract

A central issue in climate policy is the question whether long-term targets for greenhouse gas emissions should be adopted. This paper analyzes strategic effects related to the timing of such commitments. Using a two-country model, we identify a redistributive effect that undermines long-term cooperation when countries are asymmetric and side payments are unavailable. The effect enables countries to shift rents strategically via their R&D efforts under delayed cooperation. In contrast, a complementarity effect stabilizes long-term cooperation, because early commitments in abatement induce countries to invest more in low-carbon technologies, and create additional knowledge spillovers. Contrasting both effects, we endogenize the timing of climate agreements.

Keywords

Climate treaty Abatement Long-term cooperation  Spillover Strategic delay 

JEL Classification

D62 F53 H23 Q55 

Notes

Acknowledgments

We acknowledge financial support by the German Federal Ministry for Education and Research under the CREW-project (FKZ01LA1121C). We thank the participants in CREW for many fruitful discussions and suggestions. We also like to thank an anonymous referee for his or her helpful comments.

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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.Department of EconomicsHumboldt UniversityBerlinGermany

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