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International Environmental Agreements with mixed strategies and investment

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  • Hong, Fuhai
  • Karp, Larry

Abstract

We modify a canonical participation game used to study International Environmental Agreements (IEA), considering both mixed and pure strategies at the participation stage, and including a prior cost-reducing investment stage. The use of mixed strategies at the participation stage reverses a familiar result and also reverses the policy implication of that result: with mixed strategies, equilibrium participation and welfare are higher in equilibria that involve higher investment.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 96 (2012)
Issue (Month): 9-10 ()
Pages: 685-697

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Handle: RePEc:eee:pubeco:v:96:y:2012:i:9:p:685-697

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Web page: http://www.elsevier.com/locate/inca/505578

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Keywords: International Environmental Agreement; Climate agreement; Participation game; Investment; Mixed strategy;

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Cited by:
  1. Karp, Larry & Simon, Leo, 2012. "Participation Games and international environmental agreements: a nonparametric model," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5693n1nf, Department of Agricultural & Resource Economics, UC Berkeley.
  2. Johan Eyckmans & Sam Fankhauser & Snorre Kverndokk, 2013. "Equity, Development Aid and Climate Finance," Grantham Research Institute on Climate Change and the Environment Working Papers 123, Grantham Research Institute on Climate Change and the Environment.

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