The Climate Policy Hold‐Up: Green Technologies, Intellectual Property Rights, and the Abatement Incentives of International Agreements

Abstract

The success of global climate policies over the coming decades depends on the diffusion of 'green' technologies. This requires that international environmental agreements (IEAs) and trade-related intellectual property rights (TRIPs) interact productively.Using a simple and tractable model, we highlight the strategic reduction in abatement commitments on account of a hold-up effect. In anticipation of rent extraction by the innovator signatories might abate less than non-signatories turning the IEA 'brown'.Self-enforcing IEAs have fewer signatories and diffusion can reduce global abatement under TRIPs. Countries hosting patent holders extract rents from TRIPs, but may be better off without them.JEL codes: Q54, Q55, O34, O33, L12

Sharing R&D Investments in Breakthrough Technologies to Control Climate Change

“…For this value of marginal damages the solution of the game is an interior solution for the e¤ective investment and emissions, except for n = 10: The e¤ec-tive investment for both signatories and non-signatories is lower than the unity, which 16 Remember that we have normalized the model assuming that = 1; which implies that if e¤ective investment is zero the level of emissions is equal to the level of energy production. This assumption yields small values for the threshold values and hence yields levels of energy production that are close to a: Take into account that if marginal damages of emissions are low, the marginal damages of the energy production will be also low and q will not be very far from a: See expression (7).…”

“…However, Helm and Schmidt (2015) …nd the standard result that early R&D investments render free-riding more attractive. Finally, Goeschl and Perino (2015) …nd that the participation in an IEA can be small and the di¤usion of green technology can reduce global abatement under trade-related intellectual property rights. A …nal paper that deserves to be quoted is van der Pol et al (2012), where the authors examine the e¤ects of altruism on coalition stability.…”

STRATEGIC CONFLICTS ON THE HORIZON: R&D INCENTIVES FOR ENVIRONMENTAL TECHNOLOGIES

“…Several studies analyse the effects of actually providing R&D incentives, e.g. using patents, and the interaction with environmental policy (David and Sinclair-Desgagn 2005;Goeschl and Perino 2016;Hall and Helmers 2013;Laffont and Tirole 1996). In terms of the type of innovation, environmental R&D can either be cost-reducing (Bosetti et al 2009;Hall and Helmers 2013), pollution-reducing (Perino and Requate 2012;Poyago-Theotoky 2007) or, as in the present paper, technology enabling (Barrett 2006;Hoel and De Zeeuw 2010).…”

Sharing R&D investments in breakthrough technologies to control climate change

“…We shall begin calculating the threshold values for the marginal damages we have de…ned ) TABLE 1A ( Tables 1A and 1B show the PANE of the investment game for the di¤erent membership when d = d s 10 : For this value of marginal damages the solution of the game is an interior solution for the e¤ective investment and emissions, except for n = 10: The e¤ec-tive investment for both signatories and non-signatories is lower than the unity, which 16 Remember that we have normalized the model assuming that = 1; which implies that if e¤ective investment is zero the level of emissions is equal to the level of energy production. This assumption yields small values for the threshold values and hence yields levels of energy production that are close to a: Take into account that if marginal damages of emissions are low, the marginal damages of the energy production will be also low and q will not be very far from a: See expression (7).…”

“…However, Helm and Schmidt (2015) …nd the standard result that early R&D investments render free-riding more attractive. Finally, Goeschl and Perino (2015) …nd that the participation in an IEA can be small and the di¤usion of green technology can reduce global abatement under trade-related intellectual property rights. 5 To conclude the review of the literature, we would like to point out that the results obtained from the empirical papers are not conclusive.…”