Estimating Technological Gains and Losses from International Environmental Agreements

Global environmental problems, like climate change or the depletion of the ozone layer, are due to stock pollutants, e.g. CO2. As solving them requires multilateral action, international environmental agreements (IEAs) appear as the key regulatory instrument for enabling it. Nevertheless the uncertainty related to the consequences of their signature makes them prone to long negotiations. Therefore, understanding and quantifying their economic impact is a challenging but essential task to reduce the uncertainty of future IEAs. In this paper the author develops a method to give a first approximation of the technological impact of an IEA. For this he quantifies the technological gains and losses of an IEA using patent value. His method overcomes typical shortcomings of former studies and takes into account anticipation and delay effects. With this purpose the author builds a model of patent renewal under uncertain exogenous regulation that helps him disentangle the impact of a particular IEA on technological change. He estimates it using a unique pollutant-specific data set combining European patent data and policy reports from an IEA.