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The Acid Rain Game as a Resource Allocation Process with an Application to the International Cooperation among Finland, Russia and Estonia

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  • Kaitala, Veijo
  • Maler, Karl-Goran
  • Tulkens, Henry

Abstract

The authors consider optimal cooperation in transboundary air pollution abatement among several countries under incomplete information, i.e., local information only on marginal emission abatement costs and damage costs. Directions of emission abatement in each country are determined that generate a succession of emissions programs shown to converge to an economic optimum. A cost sharing scheme, which results from appropriately designed international transfers, guarantees that the individual costs of all parties are nonincreasing along the path towards the optimum. A version of K. G. Maaler's (1989) acid rain game is used for a numerical application. Copyright 1995 by The editors of the Scandinavian Journal of Economics.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 97 (1995)
Issue (Month): 2 (June)
Pages: 325-43

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Handle: RePEc:bla:scandj:v:97:y:1995:i:2:p:325-43

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. Petrosjan, Leon & Zaccour, Georges, 2003. "Time-consistent Shapley value allocation of pollution cost reduction," Journal of Economic Dynamics and Control, Elsevier, vol. 27(3), pages 381-398, January.
  2. EYCKMANS, Johan & FINUS, Michael, 2003. "Coalition formation in a global warming game : how the design of protocols affects the success of environmental treaty-making," CORE Discussion Papers 2003088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Clas Eriksson & Joakim Persson, 2003. "Economic Growth, Inequality, Democratization, and the Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(1), pages 1-16, May.
  4. Nagase, Yoko & Silva, Emilson C. D., 2000. "Optimal Control of Acid Rain in a Federation with Decentralized Leadership and Information," Journal of Environmental Economics and Management, Elsevier, vol. 40(2), pages 164-180, September.
  5. Eriksson, Clas & Persson, Joakim, 2002. "Economic Growth, Inequality, Democratization, and the Environment," Working Paper Series 178, Trade Union Institute for Economic Research.
  6. Smala Fanokoa, Pascaux & Telahigue, Issam & Zaccour, Georges, 2011. "Buying cooperation in an asymmetric environmental differential game," Journal of Economic Dynamics and Control, Elsevier, vol. 35(6), pages 935-946, June.
  7. Ing-Marie Gren, 2001. "International Versus National Actions Against Nitrogen Pollution of the Baltic Sea," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 20(1), pages 41-59, September.
  8. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal Transfers and Participation Decisions in International Environmental Agreements," Working Papers 2006_44, Department of Economics, University of Venice "Ca' Foscari".
  9. Jorgensen, Steffen & Zaccour, Georges, 2001. "Time consistent side payments in a dynamic game of downstream pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 1973-1987, December.
  10. Honkatukia, Juha & Ollikainen, Markku, 2001. "Towards Efficient Pollution Control in the Baltic Sea. An anatomy of current failure with suggestions," Discussion Papers 755, The Research Institute of the Finnish Economy.
  11. Murdoch, James C. & Sandler, Todd & Vijverberg, Wim P. M., 2003. "The participation decision versus the level of participation in an environmental treaty: a spatial probit analysis," Journal of Public Economics, Elsevier, vol. 87(2), pages 337-362, February.
  12. Lassi Ahlvik & Yulia Pavlova, 2013. "A Strategic Analysis of Eutrophication Abatement in the Baltic Sea," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(3), pages 353-378, November.
  13. Gren, Ing-Marie & Folmer, Henk, 2003. "Cooperation with respect to cleaning of an international water body with stochastic environmental damage: the case of the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 33-42, November.
  14. Michael Finus & Ekko van Ierland, 2003. "Stability of Climate Coalitions in a Cartel Formation Game," Working Papers 2003.61, Fondazione Eni Enrico Mattei.
  15. Chambers, Paul E. & Jensen, Richard A., 2002. "Transboundary Air Pollution, Environmental Aid, and Political Uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 93-112, January.

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