Environmental and Resource Economics

, Volume 60, Issue 1, pp 37–54 | Cite as

Climate Policy with Technology Transfers and Permit Trading



In this paper, we analyze technology transfers (TT) and tradable emission rights, which are core issues of the ongoing climate negotiations. Subsidizing TT leads to the adoption of better abatement technologies in the South, thereby reducing the international permit price. This is beneficial for the North as long as it is a permit buyer; hence it chooses to subsidize TT. By contrast, the permit selling South suffers from the lower permit price and its welfare usually deteriorates, despite receiving subsidies. We also consider how TT affects countries’ non-cooperative choices of permit endowments and find that it tends to reduce overall emissions. Finally, a simple numerical simulation model illustrates the results and explores some further comparative statics.


Emissions trading Technology transfer International climate policy Additionality Subsidies 

JEL Classification

D62 D78 H41 O38 Q58 


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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.Department of Economics and LawUniversity of OldenburgOldenburgGermany
  2. 2.KOF Swiss Economic InstituteETH ZurichZurichSwitzerland

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