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Environmental and Resource Economics

, Volume 49, Issue 3, pp 405–423 | Cite as

Project Mechanisms and Technology Diffusion in Climate Policy

  • Matthieu Glachant
  • Yann Ménière
Article

Abstract

The paper deals with the diffusion of GHG mitigation technologies in developing countries. We develop a model where an abatement technology is progressively adopted by firms and we use it to compare the Clean Development Mechanism (CDM) with a standard Cap and Trade scheme (C&T). In the presence of learning spillovers, we show that the CDM yields a higher social welfare than C&T if the first adopter receives CDM credits whereas the followers do not. The analysis leads us to suggest two CDM design improvements: relaxing the additionality constraint for projects which generate significant learning externalities, and allowing collective CDM projects which could internalize learning externalities.

Keywords

Climate policy Technology diffusion Kyoto Protocol Clean development mechanism Emissions trading 

JEL Classification

H87 O33 Q55 Q54 

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Copyright information

© Springer Science+Business Media B.V. 2010

Authors and Affiliations

  1. 1.Cerna, MINES ParisTechParisFrance

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