Technology Competition and International Co-operation: Friends or Foes?

Is technology competition between commercial rivals an impediment to international co-operation? Or could it instead help states collaborate? Our game-theoretic model suggests that technology competition impedes international co-operation when states hold 'techno-nationalist' preferences but have starkly asymmetric abilities to capture new markets. States that expect to lose refuse to co-operate, so treaty formation fails. However, technology competition may also facilitate co-operation. While states invest in new technologies out of self-interest, doing so also reduces consumer prices for other states. Comparative case studies of environmental co-operation demonstrate the model's utility. For example, European co-operation on climate policy was easier to achieve because forerunner countries, such as Denmark and Germany, implemented industrial policies that enhanced the competitiveness of their renewable energy industries. This technology competition reduced the cost of renewable energy for other European countries, and thus lowered the economic costs of their emissions reductions.