The paper deals with the diffusion of GHG mitigation technologies in developing countries. We develop a model where an abatement technology is progressively adopted by firms and we use it to compare the Clean Development Mechanism (CDM) with a standard Cap and Trade scheme (C&T). In the presence of learning spillovers, we show that the CDM yields a higher social welfare than C&T if the first adopter receives CDM credits whereas the followers do not. The analysis leads us to suggest two CDM design improvements: relaxing the additionality constraint for projects which generate significant learning externalities, and allowing collective CDM projects which could internalize learning externalities. © 2010 Springer Science+Business Media B.V.
CITATION STYLE
Glachant, M., & Ménière, Y. (2011). Project Mechanisms and Technology Diffusion in Climate Policy. Environmental and Resource Economics, 49(3), 405–423. https://doi.org/10.1007/s10640-010-9439-5
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