Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/194126
Authors: 
Gersbach, Hans
Riekhof, Marie-Catherine
Year of Publication: 
2018
Series/Report no.: 
Economics Working Paper Series 18/303
Abstract: 
Innovation clusters combining public and private effort to develop breakthrough technologies promise greater technological advances to slow down climate change. We use a multi-country model with emissions permit trade to examine how international climate policy can incentivize countries to create such clusters. We find that a minimal carbon price is needed to attract applied research firms, but countries may nevertheless fail to invest in complementary research infrastructure. We construct a mechanism that leads to innovation clusters. It is a combination of low permit endowments for the country with the lowest costs to build the needed infrastructure, compensation for this country by profits from permit trade, and maximal possible permit endowments for the remaining countries.
Subjects: 
International permit markets
Carbon prices
Innovation clusters
Research infrastructure
Applied R&D
Climate change mitigation
Externalities
JEL: 
H23
Q54
O32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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