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On the Enforcement of Cooperative Environmental Policies

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  • Stephane Pallage

    (UQAM)

Abstract

This paper investigates the sustainability of Pareto optimal policies for the replenishment of renewable resources shared by two countries with asymmetrical wealth. It does so within a two-country neo-classical growth model with externality. In absence of commitment, it identifies simple self-enforcing mechanisms that implement social optima for a typical international resource (clean air) and a parameterization of the model to the United States and a country five times poorer. Such mechanisms are trigger strategies involving transfers of wealth between countries and threats of economic isolation in case of defection. Necessary transfers can represent up to 2.6% of US wealth. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1006/redy.1999.0076
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 3 (2000)
Issue (Month): 3 (July)
Pages: 572-596

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Handle: RePEc:red:issued:v:3:y:2000:i:3:p:572-596

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Keywords: commitment; sustainable optima; dynamic game; renewable resource; trigger strategy; pollution; transfers;

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Cited by:
  1. Economides, George & Miaouli, Natasha, 2006. "Federal transfers, environmental policy and economic growth," Journal of Macroeconomics, Elsevier, Elsevier, vol. 28(4), pages 680-699, December.
  2. Hirazawa, Makoto & Saito, Koichi & Yakita, Akira, 2011. "Effects of international sharing of pollution abatement burdens on income inequality among countries," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 35(10), pages 1615-1625, October.
  3. Stephane Pallage & Christian Zimmermann, 2000. "Buying Out Child Labor?," Cahiers de recherche CREFE / CREFE Working Papers, CREFE, Université du Québec à Montréal 123, CREFE, Université du Québec à Montréal.

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