Katinka Kristine Holtsmark

Incentives for International Cooperation on the Climate

A healthy climate is an international public good. There is a range of other examples of such goods such as development of vaccines or reduction of trade barriers. Efficient management of these goods requires international cooperation. Though there are examples of well-managed international common goods, such cooperation is in many cases difficult to achieve. Policy makers in individual countries typically face incentives to free-ride on other countries' efforts. In order to understand how international cooperation can be improved, it is necessary to understand how policy makers' incentives are influenced by international interaction and negotiation. Katinka Holtsmark's research seeks to understand such incentives, at the intersection between environmental economics and political economy.

In a study together with Kristoffer Midttømme, Katinka Holtsmark considers the effect of linking national emission permit markets. The COP 21 negotiations in Paris in 2015 indicate that broad international participation in climate action is possible. But contributions are determined nationally, and one key insight from the negotiations is that this approach has proved more successful than the earlier attempts to build an agreement top-down. At the same time, the number of emission permit markets is high and increasing. The authors therefore consider permit market linkage in a non-cooperative setting. The countries' access to technology is endogenous and developing over time. They find that in this case linkage between different permit markets can reduce emissions and raise investments in green technology.

While visiting CESifo, Katinka Holtsmark will work on a research paper investigating incentives for national governments to invest in development of new green technologies. Building on the literature on bandit models, she aims at identifying an interaction between the negative externality from greenhouse gas emissions and a positive externality from information generated from experimentation with technology development.

Katinka Holtsmark is an assistant professor at the University of Oslo, where she obtained her PhD in economics in 2015. She is an affiliate of the CESifo Research Network, and is also affiliated with Oslo Centre for Research on Environmentally friendly Energy (CREE) and Centre for the Study of Equality, Social Organization and Performance (ESOP).