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Technology transfer with transboundary pollution: A signalling approach
Author(s) -
Hong Fuhai
Publication year - 2014
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12102
Subject(s) - technology transfer , benchmark (surveying) , valuation (finance) , pareto principle , signalling , transfer (computing) , developing country , pollution , computer science , business , environmental economics , natural resource economics , risk analysis (engineering) , industrial organization , operations research , economics , engineering , microeconomics , international trade , operations management , economic growth , geography , finance , ecology , geodesy , parallel computing , biology
There are increasing complaints from the developing world that developed countries seem reluctant to transfer green technology, despite its benefits in helping to solve the climate problem. Identifying a signalling effect of technology transfer that was neglected by the previous literature, this paper offers a rationale for this reluctance in a North‐South model with transboundary pollution. In a benchmark case with complete information, the North makes complete technology transfer, leading to a Pareto improvement. However, if the North's valuation on climate damage is its private information, the North does not completely transfer the technology in “almost all” of the equilibria.