Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/51316
Authors: 
Kratzsch, Uwe
Sieg, Gernot
Stegemann, Ulrike
Year of Publication: 
2010
Series/Report no.: 
Economics Department Working Paper Series 10
Abstract: 
If an emission reduction agreement with participation of all players is not enforceable because politicians are too myopic or not able to commit themselves to sustainable policies or costs of reducing emissions are too high, strategic investments in research and development (R&D) of green technology, for example sustainable drive-trains, can pave the way for a future treaty. Although no player will rationally reduce emissions on its own, investments in R&D by at least one player can change the strategic situation of negotiations to control emissions: Emission abatement costs will decrease so that a treaty with full participation can be achieved in future periods through time consistent sustainable policies.
Subjects: 
emissions
discount factor
commitment
endogenous technical change
repeated prisoner's dilemma
JEL: 
Q54
F53
O30
H41
Document Type: 
Working Paper

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