The role of technological optimism in international climate agreements

Abstract

This research aims to explore the role of technological optimism in international climate agreements and how technological optimism affects the climate-related behaviors of countries. To this end, I built upon the dynamic game with stocks proposed by Harstad (2012, 2016), which takes emissions and green technology investments as contractible strategies. An R&D project that aims to invent a technology that will decrease the accumulation of greenhouse gases is introduced into the model. A comparison between my model, where the R&D dimension is exclusively considered, and the baseline model proposed by Harstad will capture how technological optimism may alter the behavior of countries. With the presence of an R&D project, emission levels and the greenhouse gas stock increase, and the global stock of green technology and its investments decrease for all countries in both the first-best (cooperative) and the business-as-usual (non-cooperative) outcomes. The effect of technological optimism increases when the R&D project is expected to invent a more robust technology to decrease greenhouse gas accumulation. My model explores how relying on a future technology affects the current action plan to tackle climate change, thus contributing to the literature on international climate agreements, dynamic games and technological optimism.