JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Free-riding is at the core of environmental problems. If a climate coalition reduces its emissions, world prices change and nonparticipants typically emit more; they may also extract the dirtiest type of fossil fuel and invest too little in green technology. The coalition's second-best policy distorts trade and is not time consistent. However, suppose that the countries can trade the rights to exploit fossil-fuel deposits: As soon as the market clears, the above-mentioned problems vanish and the first-best is implemented. In short, the coalition's best policy is to simply buy foreign deposits and conserve them.
The University of Chicago Press
We have benefitted from participants at the Climate and the Economy conference, IIES-Stockholm University, the conference Instruments to curb global warming: Recent developments, Paris, and a seminar at the University of Oslo. We are particularly grateful to the comments from Tore Ellingsen and Kjetil Storesletten. We thank Nemanja Antic for outstanding research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
For two districts or countries that try to internalize externalities, I analyze a bargaining game under private information. I derive conditions for when it is efficient with uniform policies across regions—with and without side payments— and when it is efficient to prohibit side payments in the negotiations. While policy differentiation and side payments allow the policy to better reflect local conditions, they create conflicts between the regions and, thus, delay. The results also describe when political centralization outperforms decentralized cooperation, and they provide a theoretical foundation for the controversial "uniformity assumption" traditionally used by the fiscal federalism literature. (JEL C78, D72, D82, H77)
This paper analyzes a framework in which countries over time pollute and invest in green technologies. Without a climate treaty, the countries pollute too much and invest too little, particularly if intellectual property rights are weak. Nevertheless, short‐term agreements on emission levels then reduce every country's payoff, since countries invest less when they anticipate future negotiations. If intellectual property rights are weak, the agreement should be tougher and more long‐term. Conversely, if the climate agreement happens to be short‐term or absent, intellectual property rights should be strengthened or technological licensing subsidized.
W hen faced with a regulatory constraint, firms can either comply, bribe the regulator to get around the rule, or lobby the government to relax it. We analyze this choice, and its consequences, in a simple dynamic model. In equilibrium, when the level of development is low, firms are more inclined to bend the rule through bribery but they tend to switch to lobbying when the level of development is sufficiently high. Bribery, however, is associated with holdup problems, which discourage firms from investing. If the holdup problems are severe, firms will never invest enough to make lobbying worthwhile. The country may then be stuck in a poverty trap with bribery forever. The model can account for the common perception that bribery is relatively more common in poor countries, whereas lobbying is relatively more common in rich ones.In India, as elsewhere in the developing world, the old business of corruption is meeting a new rival: the Washington-style business of persuasion --International Herald Tribune,
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