Endogenous green technology innovation and diffusion with strategic international spillovers

Escalating environmental challenges necessitate accelerated green technology innovation and diffusion. This paper introduces a novel theoretical framework synthesizing differential game theory, endogenous growth with directed technical change, and network analysis to investigate the interplay between strategic national R&D investments, the endogenous direction of innovation, and structured international knowledge spillovers. The model contrasts non-cooperative and cooperative equilibria, revealing that non-cooperation yields suboptimal global outcomes: underinvestment in green R&D, delayed transitions, and a failure to curb long-term pollution, driven by free-riding on environmental benefits and knowledge spillovers. The spillover network's architecture critically mediates these dynamics. Conversely, cooperative solutions markedly improve environmental and technological trajectories. Numerical simulations confirm these findings and demonstrate that globally coordinated policy mixes, specifically carbon pricing combined with green R&D subsidies, can effectively approach cooperative outcomes. The analysis underscores the critical roles of relative green R&D productivity and spillover intensity in determining the pace and success of the global green transition. This research provides a comprehensive lens for understanding and shaping the global green technology landscape and formulating effective international environmental and technology policies.