Seminarium med Roweno J.R.K. Heijmans

 
Abstract 
 
I study emissions abatement in a global game of technological in­vestments. Players invest in competing technologies. One technol­ogy is cheap and dirty, the other expensive but clean, and invest­ments exhibit technological spillovers. The paper makes two main contributions. My first contribution is to resolve complications due to equilibrium multiplicity in games of technological invest­ment by addressing equilibrium selection through the use of global games. In well identified cases the unique equilibrium is ineffi­cient, motivating policy intervention. This leads to my second con­tribution, the introduction of network subsidies. A network subsi­dy allows the policymaker to correct for the entire externality de­riving from technological spillovers (and for all externalities if in­vesting in the clean technology is also an equilibrium) but does not, in equilibrium, cost anything. Albeit derived in the context of climate change, the concept of a network subsidy is general and contributes to public economics more broadly.