Policy and Product Differentiations Encourage the International Transfer of Environmental Technologies

Abstract

This paper investigates the welfare effects of international transfers of environmental technologies in open economies with international oligopoly and transboundary pollution, and shows that policy differentiation between the donor and recipient countries and/or product differentiation between the donor and recipient firms play a critical role in obtaining a bilateral agreement on the transfer policy between nations. The results arise from the fact that policy differentiation weakens the strategic relationships in environmental policy setting between governments and that product differentiation weakens the strategic relationships in quantity choices between firms.Technology Transfer; Environmental Tax; Oligopoly