Self-enforcing international environmental agreements with a stock pollutant

Abstract

In this paper the stability of an International Environmental Agreement (IEA) among N identical countries that emit a pollutant are studied using a two-stage game. In the first stage each country decides noncooperatively whether or not to join an IEA, and in the second stage signatories jointly against nonsignatories determine their emissions in a dynamic setting defined in continuous time. A numerical simulation shows that a bilateral coalition is the unique self-enforcing IEA independently of the gains coming from cooperation and the kind of strategies played by the agents (open-loop or feedback strategies). We have also studied the effects of a minimum participation clause finding that for this case a self-enforcing IEA just consists of the number of countries established in the clause. Copyright Springer-Verlag Berlin/Heidelberg 2005International environmental agreements, Stock externalities, Differential games, Open-loop Nash equilibrium,

The Effects of the Length of the Period of Commitment on the Size of Stable International Environmental Agreements

“…4 These are b = 1650; a = 100000, the scale parameter; 5 γ = 0.001; r = 0.025; ρ = 0.005. 6 The model captures the result of Rubio and Casino [6] and Rubio and Ulph [5] for some values of the length of commitment and yields different results for others.…”

“…The limiting case of a single period of commitment and the open-loop emissions strategy to which it corresponds is shown to yield, as in Rubio and Casino [6], a coalition of only two signatories. This generates a lower gain from cooperation than that which arises in the case of any finite length of commitment.…”

“…We use the same parameter values as Rubio and Casino [6]. 4 These are b = 1650; a = 100000, the scale parameter; 5 γ = 0.001; r = 0.025; ρ = 0.005.…”

“…The first case corresponds to short lengths of commitment (h < 4. We do this simulation for a group of 20 countries while Rubio and Casino [6] did it for a group of 10, but this is of no qualitative consequence for the results.…”

“…Rubio and Casino [6] adapt to a dynamic framework the concept of IEA introduced by Barrett [1] and Carraro and Siniscalco [2]. They assume that at the initial date, given the initial stock of pollutant, countries play a two stage game.…”