Optimal transfers and participation decisions in international environmental agreements

Carraro, Carlo; Eyckmans, Johan; Finus, Michael

doi:10.1007/s11558-006-0162-5

Cited by 163 publications

(74 citation statements)

References 22 publications

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“…For instance, this could mean that the United States, despite of not being and not becoming a member of the Kyoto Protocol, could finance membership of China or India in order to join this treaty. In the CWS model of the CGE type considered in Carraro et al (2006) it is shown that such a strategy can work, implying a Pareto-improvement to all countries.…”

Section: Transfersmentioning

confidence: 99%

Game Theoretic Research on the Design of International Environmental Agreements: Insights, Critical Remarks, and Future Challenges

Finus

2008

IRERE

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187

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In recent years, the number of publications that analyze the formation and stability of international environmental agreements (IEAs) using the method of game theory has sharply increased. This paper reports on some recent results that shall demonstrate the usefulness but also the limitation of game theory for the analysis of IEAs. It restricts attention to the class of non-cooperative membership models and focuses on the relation between different designs and the success of IEAs. Results are illustrated for the climate change problem with the empirical Stability of Coalitions (STACO) model developed by Dellink et al. (2004). Subsequently, some features of actual treaty-making not considered with this model are discussed with reference to the literature and their importance for future research is highlighted.

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Section: Transfersmentioning

confidence: 99%

Game Theoretic Research on the Design of International Environmental Agreements: Insights, Critical Remarks, and Future Challenges

Finus

2008

IRERE

Self Cite

187

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“…A significant part of the literature uses game theory as a tool to understand the formation mechanism of IEAs. There are two main directions of literature on IEAs (for a review of current literature see (Finus 2003;Carraro and Siniscalco 1998;Ioannidis et al 2000;Carraro et al 2005). The first direction utilizes the concepts of cooperative game theory in order to model the formation of IEAs.…”

Section: Introductionmentioning

confidence: 99%

The Case of two Self-Enforcing International Agreements for Environmental Protection with Asymmetric Countries

Osmani¹,

Tol

2010

Comput Econ

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Non-cooperative game theoretical models of self-enforcing international environmental agreements (IEAs) that employ the cartel stability concept of D'Aspremont et al. (Can J Econ 16:17-25, 1983) frequently assume that countries are identical, and they can sign a single agreement only. We modify the assumption by considering two self-enforcing IEAs and also two types of asymmetric countries. Extending a model of Barrett (Oxford Econ Pap 46:878-894, 1994), we demonstrate that there are similarities between one and two self-enforcing IEAs. But in the case of few countries and high environmental damage we show that two self-enforcing IEA work far better than one self-enforcing IEA in terms of both welfare and environmental quality. Our simulation shows that only if all countries that have fewer benefits and higher cost from pollution abatement must build one coalition, there is hope that two myopic stable coalition can be formed. Moreover, if the cost-benefit functions of pollution abatement impose that the first myopic coalition is formed by countries, which have higher benefits and lower cost from pollution abatement, then two IEA's worsen abatement and welfare in comparison to one IEA. But, if the first myopic coalition is formed by countries, which have smaller benefits and higher cost from pollution abatement, then two IEA's improve abatement and welfare in comparison to one IEA.

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“…it achieves at least the sum of what its members can achieve without cooperation. Recently a class of sharing rules has been proposed that divides the difference between the coalition payoff and the sum of the outside option payoffs of coalition members (Carraro et al 2006;McGinty 2007;Weikard 2009;Fuentes-Albero and Rubio 2010). The outside option payoff is the payoff a player would receive when leaving the coalition.…”

Section: Introductionmentioning

confidence: 99%

Sticks and carrots for the design of international climate agreements with renegotiations

Weikard

Dellink

2010

Ann Oper Res

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This paper examines renegotiations of international climate agreements for carbon abatement. We explore coalition stability under 'optimal transfers' that have been suggested to stabilise international environmental agreements (e.g. McGinty in Oxford Economic Papers 59, [45][46][47][48][49][50][51][52][53][54][55][56][57][58][59][60][61][62] 2007). Such transfer schemes need to be refined when agreements are renegotiated. We determine the requirements that transfers between signatories of an international climate agreement must satisfy in order to stabilise the sequence of agreements that performs best in terms of provision of the public good 'carbon abatement'. If these requirements are met, no country wants to change its membership status at any stage. In order to demonstrate the applicability of our result we use the STACO model, a 12-regions global model, to assess the impact of well-designed transfer rules on the stability of an international climate agreement. Although there are strong free-rider incentives, we find a stable grand coalition in the first commitment period in a game with one round of renegotiations if renegotations take place sufficiently early.

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Optimal transfers and participation decisions in international environmental agreements

Cited by 163 publications

References 22 publications

Game Theoretic Research on the Design of International Environmental Agreements: Insights, Critical Remarks, and Future Challenges

Game Theoretic Research on the Design of International Environmental Agreements: Insights, Critical Remarks, and Future Challenges

The Case of two Self-Enforcing International Agreements for Environmental Protection with Asymmetric Countries

Sticks and carrots for the design of international climate agreements with renegotiations

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