Strategic Behavior and the Environment > Vol 5 > Issue 2

Absorption of Advanced Technologies and the Environment

Ben M'rad Hichem, LAREQUAD, FSEGT, University of Tunis El Manar, Tunisia,
Suggested Citation
Ben M'rad Hichem (2015), "Absorption of Advanced Technologies and the Environment", Strategic Behavior and the Environment: Vol. 5: No. 2, pp 157-174.

Publication Date: 08 Oct 2015
© 2015 B. M. Hichem
Environmental Economics:Market-based Policy Instruments,  Economic Theory:Game Theory,  Public Economics:Environmental Taxation,  Regulation
Endogenous absorptive capacityR&DRransboundary pollutionAbatement cost


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In this article:
1. Introduction 
2. The Model 
3. The Less Developed Country Strategy 
4. Conclusion 


This paper addresses the strategic behavior of developed and developing countries relative to emissions control within a closed model. Investment in absorptive capacity (AC) and tax on emissions are used to control the abatement efforts. Exogenous research and development (R&D) spillovers move freely from the developed country to the developing country. This allows the developing country to increase its AC. We find that the less developed country invests in AC only when the amount of exogenous spillovers is higher than a critical level. This positive investment in AC increases with respect to the technological level of the more developed country only when the exogenous spillovers are not excessive. Otherwise, the less developed country decreases its investment. We demonstrate that in most cases optimal emissions tax has an inverse relationship with the technological level of the developed country.