Expectation-driven climate treaties with breakthrough technologies

Arbeitspapier

Recent research has shown that agreements centered on the adoption of breakthrough technologies can break the deadlock in international climate negotiations if the mitigation technology exhibits a network externality that transforms full cooperation into a self-enforcing outcome. This paper shows that the same externality also increases strategic uncertainty about future technology adoption, which makes coordination on the cooperative outcome more demanding. We analyze this coordination problem in a dynamic game of technology adoption with convex switching costs. We find that the adoption dynamics for some technologies depend exclusively on countries' expectations about future adoption. This possibility calls for a more prominent role of expectation management in climate policy. Another implication is that the choice of breakthrough technologies should be guided not only by economic efficiency and strategic adoption incentives but also by the amount of strategic uncertainty they engender.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 1732

Classification and Topics

• Classification: Wirtschaft ; Climate; Natural Disasters and Their Management; Global Warming ; Technological Change: Choices and Consequences; Diffusion Processes ; International Fiscal Issues; International Public Goods
• Subject: International environmental agreements (IEAs) ; climate policy ; technology choice ; expectations ; multiple equilibria

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Narita, Daiju ; Wagner, Ulrich J.
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/49388
• Last update: 10.03.2025, 11:44 AM CET