Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-23T05:58:22.698Z Has data issue: false hasContentIssue false
  • English
  • Français

North-South diffusion of climate-mitigation technologies: the crowding-out effect on relocation

Published online by Cambridge University Press:  22 January 2020

Julie Ing  and
Jean-Philippe Nicolaï Open the ORCID record for Jean-Philippe Nicolaï [Opens in a new window]
Julie Ing
Affiliation:
University of Rennes 1, CREM (Centre de Recherche en Economie et Management), Rennes, France
Jean-Philippe Nicolaï*
Affiliation:
EconomiX-CNRS, University of Paris Nanterre, France ETH Zürich, Switzerland
*
*Corresponding author. E-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The deployment of cleaner production technologies is supposed to be crucial to mitigate the effect of climate change. The diffusion of technology from developed to developing countries can be done through different channels. It can be a business decision such as firms' relocation, opening of a subsidiary or the adoption of technology by southern firms, or it may be decided at the government level. This paper investigates, in a two-country model (North and South), the relationship between the diffusion of mitigation technologies, firms' relocation and the environment. We assume that both countries implement a carbon tax and there are two kinds of production technology used: a relatively clean technology and a dirty one. This paper theoretically shows that the technology diffusion by technology adoption, public transfer or subsidiary creation induces a decrease in relocation, while technology diffusion via purchasing dirty southern firms may increase the number of relocated firms. The paper also demonstrates that technology diffusion may have perverse effects in the long run. Indeed, total emissions may increase with technology diffusion since southern firms become more competitive.

Keywords

technology diffusioncarbon taxrelocationtrade of polluting goodsimperfect competitionsubsidiarypublic transfer

JEL classification

Q58: Government Policy Q53: Air Pollution • Water Pollution • Noise • Hazardous Waste • Solid Waste • Recycling L13: Oligopoly and Other Imperfect Markets
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Special Issue 1: The Economics of Climate Change and Sustainability (Part B) , February 2020 , pp. 21 - 43
Copyright
Copyright © Cambridge University Press 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aghion, P and Jaravel, X (2015) Knowledge spillovers, innovation and growth. The Economic Journal 125, 533–573.CrossRefGoogle Scholar
Aubert, P and Sillard, P (2005) Délocalisations et réductions d'effectifs dans l'industrie française. L'économie française - Comptes et dossiers, Edition 2005–2006, Insee Références, pp. 57–89 (in French).Google Scholar
Banerjee, S and Poddar, S (2019) To sell or not to sell: Licensing versus selling by an outside innovator. Economic Modelling 76, 293–304.CrossRefGoogle Scholar
Bretschger, L, Lechthaler, F, Rausch, S and Zhang, L (2017) Knowledge diffusion, endogenous growth, and the costs of global climate policy. European Economic Review 93, 47–72.CrossRefGoogle Scholar
Dechezleprêtre, A, Glachant, M, Hascic, I, Johnstone, N and Méni ère, Y (2011) Invention and transfer of climate change-mitigation technologies: A global analysis. Review of Environmental Economics and Policy 5, 109–130.CrossRefGoogle Scholar
Eaton, J and Kortum, S (2002) Technology, geography, and trade. Econometrica 70, 1741–1779.CrossRefGoogle Scholar
Ethier, WJ and Markusen, JR (1996) Multinational firms, technology diffusion and trade. Journal of International Economics 41, 1–28.CrossRefGoogle Scholar
Fosfuri, A, Motta, M and Ronde, T (2001) Foreign direct investment and spillovers through workers' mobility. Journal of International Economics 53, 205–222.CrossRefGoogle Scholar
Glachant, M and Dechezleprêtre, A (2017) What role for climate negotiations on technology transfer? Climate Policy 17, 962–98.CrossRefGoogle Scholar
Glachant, M, Ing, J and Nicolaï, JP (2017) The incentive for North-South transfer of climate-mitigation technologies with trade in polluting goods. Environmental and Resource Economics 66, 435–456.CrossRefGoogle Scholar
Greaker, M (2003) Strategic environmental policy when the governments are threatened by relocation. Resource and Energy Economics 25, 141–154.CrossRefGoogle Scholar
Helm, C and Pichler, S (2015) Climate policy with technology transfers and permit trading. Environmental and Resource Economics 60, 37–54.CrossRefGoogle Scholar
Hoel, M (1997) Environmental policy with endogenous plant locations. Scandinavian Journal of Economics 99, 241–259.CrossRefGoogle Scholar
Ikefuji, M, Itaya, JI and Okamura, M (2016) Optimal emission tax with endogenous location choice of duopolistic firms. Environmental and Resource Economics 65, 463–485.CrossRefGoogle Scholar
Kamien, M and Tauman, Y (1986) Fees versus royalties and the private value of a patent. Quarterly Journal of Economics 101, 471–491.CrossRefGoogle Scholar
Kamien, M, Oren, SS and Tauman, Y (1992) Optimal licensing of cost-reducing innovation. Journal of Mathematical Economics 21, 483–508.CrossRefGoogle Scholar
Keller, W (2004) International technology diffusion. Journal of Economic Literature 92, 752–782.CrossRefGoogle Scholar
Keller, W (2010) International trade, foreign direct investment, and technology spillovers. In Hall BH and Rosenberg N (eds), Handbook of the Economics of Innovation, volume 2. Amsterdam: Elsevier, pp. 793–829.CrossRefGoogle Scholar
Kim, SL and Lee, SH (2014) Eco-technology licensing under emission tax: Royalty vs. fixed-fee. Korean Economic Review 30, 273–300.Google Scholar
Markusen, JR, Morey, ER and Olewiler, ND (1993) Environmental policy when market structure and plant locations are endogenous. Journal of Environmental Economics and Management 24, 69–86.CrossRefGoogle Scholar
Martin, R, Muuls, M, De Preux, LB and Wagner, UJ (2014) Industry compensation under relocation risk: A firm-level analysis of the EU Emissions Trading Scheme. American Economic Review 104, 2482–2508.CrossRefGoogle Scholar
Maskus, KE (2010) Differentiated intellectual property regimes for environmental and climate technologies. OECD Environment Working Papers, No. 17, OECD Publishing.Google Scholar
Maskus, KE and Yang, L (2018) Domestic patent rights, access to technologies and the structure of exports. Canadian Journal of Economics 51, 483–509.CrossRefGoogle Scholar
Motta, M and Thisse, J (1994) Does environmental dumping lead to delocation? European Economic Review 38, 563–576.CrossRefGoogle Scholar
Newman, C, Rand, J, Talbot, T and Tarp, F (2015) Technology transfers, foreign investment and productivity spillovers. European Economic Review 76, 168–187.CrossRefGoogle Scholar
Nicolaï, JP and Zammorano, J (2018) Differentiating permit allocation across areas. Annals of Economics and Statistics 132, 105–128.CrossRefGoogle Scholar
Petrakis, E and Xepapadeas, A (2003) Location decisions of a polluting firm and the time consistency of environmental policy. Resource and Energy Economics 25, 197–214.CrossRefGoogle Scholar
Rivera-Batiz, L and Romer, P (1991) Economic integration and endogenous growth. The Quarterly Journal of Economics 106, 531–555.CrossRefGoogle Scholar
Sanna-Randaccio, F, Sestini, R and Tarola, O (2017) Unilateral climate policy and foreign direct investment with firm and country heterogeneity. Environmental and Resource Economics 67, 379–401.CrossRefGoogle Scholar
Stephan, G and Muller-Furstenberger, G (2015) Global warming, technological change and trade in carbon energy: Challenge or threat? Environmental and Resource Economics 62, 791–809.CrossRefGoogle Scholar
Stranlund, JK (1996) On the strategic potential of technological aid in international environmental relations. Journal of Economics / Zeitschrift Für Nationalökonomie 64, 1–22.CrossRefGoogle Scholar
Taylor, S (2005) Unbundling the pollution haven hypothesis. The B.E. Journal of Economic Analysis & Policy 4, 1–28.Google Scholar
Van de Klundert, T and Smulders, S (1996) North-South knowledge spillovers and competition: Convergence versus divergence. Journal of Development Economics 50, 213–232.CrossRefGoogle Scholar
World Bank and Ecofys (2018) State and Trends of Carbon Pricing 2018. Washington, DC: World Bank. Available at https://openknowledge.worldbank.org/handle/10986/29687.Google Scholar
Yang, L and Maskus, KE (2001) Intellectual property rights, licensing, and innovation in an endogenous product-cycle model. Journal of International Economics 53, 169–187.CrossRefGoogle Scholar
Yang, L and Maskus, KE (2009) Intellectual property rights, technology transfer and exports in developing countries. Journal of Development Economics 90, 231–236.CrossRefGoogle Scholar
Supplementary material: PDF

Ing and Nicolaï supplementary material

Appendices

Download Ing and Nicolaï supplementary material(PDF)
PDF 101.6 KB