On the Optimal Allocation of Green Technology under Climate Change Agreements

FNI Report 8/2009. Lysaker, FNI, 2009, 44 p.

This report investigates whether a technology transfer mechanism can help to reach a cooperative outcome, in a game on a climate change treaty that involves emission caps for both developed and developing countries. A climate change treaty without the inclusion of developing countries and their acceptance of emission limits is likely to be ineffective. Too little research and development of green technology is currently undertaken, considering its potential global impact, especially in developing countries. Analyzing a simple game with two asymmetric players, a tentative result is that the technology-transfer mechanism considered here cannot help to establish the cooperative outcome as a Nashequilibrium. However, the inclusion of secondary benefits in the payoff function, which are likely to occur when such a transfer takes place, could change this result.