On the timing of climate agreements

Robert Schmidt and Roland Strausz

No 2014-044, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: A central issue in climate policy is the question whether long-term targets for green- house 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 stabi- lizes long-term cooperation, because early commitments in abatement induce countries to invest more in low-carbon technologies, and create additional knowledge spillovers. Con- trasting both effects, we endogenize the timing of climate agreements.

Keywords: climate treaty; abatement; long-term cooperation; spillover; strategic delay (search for similar items in EconPapers)
JEL-codes: D62 F53 H23 Q55 (search for similar items in EconPapers)
Date: 2014
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Journal Article: On the Timing of Climate Agreements (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb649:sfb649dp2014-044

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