Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207140 
Year of Publication: 
2019
Series/Report no.: 
Economics Working Paper Series No. 19/318
Publisher: 
ETH Zurich, CER-ETH - Center of Economic Research, Zurich
Abstract: 
The deployment of cleaner production technologies is crucial to mitigate the effect of climate change. The diffusion of technology from developed to developing countries can be done through different channels. It can be a business decision such as firms' relocation, creation of a subsidiary or the adoption of technology by southern firms, or it may be decided at government level. This paper investigates in a two-country model (North and South) the relationship between the firms' relocation and diffusion of mitigation technologies. We assume that both countries implement a carbon tax and there are two kinds of production technology used: a relatively clean technology and a dirty one. This paper theoretically shows that the diffusion technology by technology adoption, public transfer or subsidiary creation induces a decrease in relocation, while technology diffusion via purchasing dirty southern firms may increase the number of relocated firms. The paper also demonstrates that technology diffusion may have perverse effects in the long run. Indeed, total emissions may increase with technology diffusion since southern firms are more competitive.
Subjects: 
Technology transfer
Carbon tax
Relocation
Trade of polluting goods
Imperfect competition
JEL: 
L13
Q53
Q58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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