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Timing of adoption of clean technologies, transboundary pollution and international trade

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  • Ben Jebli, Mehdi
  • Ben Youssef, Slim
Abstract
The authors consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology which uses fossil energy. However, these firms can adopt a clean technology which uses a renewable energy having a lower unit cost. Surprisingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. Interestingly, the socially optimal adoption date under a common market better internalizes transboundary pollution than that under autarky. It also better internalizes transboundary pollution compared with the optimal adoption dates for firms. In autarky (resp. a common market), firms adopt the clean technology earlier (resp. later) than what is socially optimal and, therefore, regulators can induce clean technology adoption at the socially optimal adoption date by giving firms postpone (resp. speed up) adoption subsidies. Opening markets to international trade, speeds up socially optimal adoption dates and delays optimal adoption dates for firms. Consequently, with market opening, speed up adoption subsidies are needed to reduce the global flow of pollution.

Suggested Citation

  • Ben Jebli, Mehdi & Ben Youssef, Slim, 2013. "Timing of adoption of clean technologies, transboundary pollution and international trade," Economics Discussion Papers 2013-50, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201350
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    Cited by:

    1. Ben Jebli, Mehdi & Ben Youssef, Slim & Apergis, Nicholas, 2014. "The dynamic interaction between combustible renewables and waste consumption and international tourism: The case of Tunisia," MPRA Paper 59827, University Library of Munich, Germany.
    2. Jiang, Shaohua & Mentel, Grzegorz & Shahzadi, Irum & Ben Jebli, Mehdi & Iqbal, Najaf, 2022. "Renewable energy, trade diversification and environmental footprints: Evidence for Asia-Pacific Economic Cooperation (APEC)," Renewable Energy, Elsevier, vol. 187(C), pages 874-886.

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    More about this item

    Keywords

    regulation; adoption date; renewable energy; transboundary pollution; common;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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