That is because there is less air up there. So the temperature decreases as you go up because it is approaching the no atmosphere parameter. Well, that is because of radiation also. Light can be absorbed, reflected, refracted, or scattered. An effect known as Rayleigh scattering is responsible for the blue in the sky.
Blue light has a shorter wavelength than the rest of visible light.
Since the atmosphere is made up of oxygen and nitrogen, which are much smaller than the wavelength of light, they scatter all light with a blue wavelength. In Mie scattering, a larger particle, such as a cloud drop, would scatter all light. This is why clouds are white. Well, they are the effect of light refracting off of a raindrops. It is exactly the same way a prism works.