The role of technological optimism in international climate agreements

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.