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Strategy Proof Uniform Effort Sharing Schemes For Transfrontier Pollution Problems

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  • Johan Eyckmans

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Abstract

Uniform effort sharing rules for transfrontier pollution problems, like the popular equal percentage reduction arrangement, do not result in a cost efficient allocation of emission abatement efforts. In addition, they may violate voluntary participation constraints if the uniform effort level is decided upon by means of ordinary majority vote. In contrast to ordinary majority vote, I consider in this paper the so-called conservative mechanism by Moulin (1994) which picks the smallest revealed effort level in stead of the median. The conservative mechanism always respects a weak participation constraint. Moreover, it is coalitionally strategy proof meaning that no individual player, or group of players, can achieve a better outcome by misrepresenting its preferences for environmental quality. In order to remedy the cost inefficiency of the equal percentage arrangements, I propose to apply the conservative mechanism to the choice of a uniform emission tax rate. Simulations for the greenhouse effect indicate that the latter mechanism does considerably better than the traditional equal percentage arrangement. Copyright Kluwer Academic Publishers 1999

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 14 (1999)
Issue (Month): 2 (September)
Pages: 165-189

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Handle: RePEc:kap:enreec:v:14:y:1999:i:2:p:165-189

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Web page: http://www.springerlink.com/link.asp?id=100263

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Keywords: mechanism design; strategy proofness; transfrontier pollution problems;

References

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  1. Moulin, Herve, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 61(2), pages 305-25, April.
  2. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1992. "The Costs of Reducing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 115, OECD Publishing.
  4. Satterthwaite, Mark Allen, 1975. "Strategy-proofness and Arrow's conditions: Existence and correspondence theorems for voting procedures and social welfare functions," Journal of Economic Theory, Elsevier, vol. 10(2), pages 187-217, April.
  5. Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
  6. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-37, July.
  7. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July.
  8. H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
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Cited by:
  1. Anriquez, Gustavo, 2002. "Trade And The Environment: An Economic Literature Survey," Working Papers 28598, University of Maryland, Department of Agricultural and Resource Economics.
  2. Michael Finus & Johan Eyckmans, 2003. "New Roads to International Environmental Agreements: The Case of Global Warming," Working Papers 2003.88, Fondazione Eni Enrico Mattei.
  3. Urs Brandt, 2003. "Are Uniform Solutions Focal? – The Case of International Environmental Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(3), pages 357-376, July.
  4. Hans-Peter Weikard & Rob Dellink, 2008. "Sticks and Carrots for the Design of International Climate Agreements with Renegotiations," Working Papers 2008.26, Fondazione Eni Enrico Mattei.
  5. Alfred Endres & Bianca Rundshagen, 2013. "Incentives to Diffuse Advanced Abatement Technology Under the Formation of International Environmental Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(2), pages 177-210, October.

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