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Signaling in international environmental agreements: the case of early and delayed action

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  • Michael Jakob

    ()

  • Kai Lessmann

Abstract

This paper presents a stylized international environmental agreements game with two regions differing in their preference for environmental quality. If side payments are allowed, cooperation can increase the payoffs accruing to both regions. However, cooperation can be impeded by asymmetric information about the regions’ types and only become feasible once a region has credibly revealed its type. We show how in a two-stage game early (delayed) action can act as a credible signal to reveal private information on high (low) benefits. Yet, the cooperative solution with asymmetric information is Pareto-dominated by the outcome with perfect information. Copyright Springer Science+Business Media B.V. 2012

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File URL: http://hdl.handle.net/10.1007/s10784-012-9170-5
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Bibliographic Info

Article provided by Springer in its journal International Environmental Agreements: Politics, Law and Economics.

Volume (Year): 12 (2012)
Issue (Month): 4 (November)
Pages: 309-325

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Handle: RePEc:spr:ieaple:v:12:y:2012:i:4:p:309-325

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Web page: http://www.springer.com/economics/journal/10784

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Related research

Keywords: International environmental agreements; Climate policy; Asymmetric information; Signaling game;

References

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Cited by:
  1. Gregor Schwerhoff, 2013. "Leadership and International Climate Cooperation," Working Papers 2013.97, Fondazione Eni Enrico Mattei.
  2. Ottmar Edenhofer & Christian Flachsland, 2012. "Die Nutzung globaler Gemeinschaftsgüter: Politökonomische Herausforderungen an die Klimapolitik," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 65(12), pages 29-35, 06.

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