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Economics Research International
Volume 2011 (2011), Article ID 318523, 6 pages
http://dx.doi.org/10.1155/2011/318523
Research Article

A Full Participation Agreement on Global Emission Reduction through Strategic Investments in R&D

Institut für Volkswirtschaftslehre, TU Braunschweig, Spielmannstraβe 9, 38106 Braunschweig, Germany

Received 2 August 2011; Revised 18 August 2011; Accepted 6 September 2011

Academic Editor: Henk Folmer

Copyright © 2011 Uwe Kratzsch et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

If an emission reduction agreement with participation of all players is not enforceable because politicians are too myopic or costs of reducing emissions are too high, strategic investments in research and development (R&D) of green technology, for example, sustainable drivetrains, 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.