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Can Uncertainty Alleviate the Commons Problem?

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  • Yann Bramoullé
  • Nicolas Treich

Abstract

Global commons problems, such as climate change, are often affected by severe uncertainty. The paper examines the effect of uncertainty on pollution emissions and welfare in a strategic context. We find that emissions are always lower under uncertainty than under certainty, reflecting risk-reducing considerations. We show that uncertainty can have a net positive impact on the welfare of risk-averse polluters. We extend the analysis to increases in risk, increases in risk-aversion, and to risk heterogeneity. (JEL: D81, C72, Q54, H23) (c) 2009 by the European Economic Association.

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Bibliographic Info

Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 7 (2009)
Issue (Month): 5 (09)
Pages: 1042-1067

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Handle: RePEc:tpr:jeurec:v:7:y:2009:i:5:p:1042-1067

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Cited by:
  1. Gollier, Christian & Hammitt, James & Treich, Nicolas, 2013. "Risk and Choice: A Research Saga," IDEI Working Papers 804, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Jérémy Laurent-Lucchetti & Justin Leroux & Bernard Sinclair-Desgagné, 2011. "Splitting an Uncertain (Natural) Capital," Cahiers de recherche 11-01, HEC Montréal, Institut d'économie appliquée.
  3. Stefan Baumgärtner & Martin F. Quaas, 2007. "Agro-biodiversity as natural insurance and the development of financial insurance markets," Working Paper Series in Economics 61, University of Lüneburg, Institute of Economics.
  4. Quaas, Martin F. & Baumgärtner, Stefan, 2008. "Natural vs. financial insurance in the management of public-good ecosystems," Ecological Economics, Elsevier, vol. 65(2), pages 397-406, April.
  5. Finus, M & Pintassilgo, Pedro & Ulph, Alistair, 2014. "International Environmental Agreements with Uncertainty, Learning and Risk Aversion," Department of Economics Working Papers 39840, University of Bath, Department of Economics.
  6. TREICH Nicolas, 2009. "Risk-aversion and Prudence in Rent-seeking Games," LERNA Working Papers 09.05.281, LERNA, University of Toulouse.
  7. Stefan Baumgärtner & Martin F. Quaas, 2008. "Managing increasing environmental risks through agro-biodiversity and agri-environmental policies," Working Paper Series in Economics 80, University of Lüneburg, Institute of Economics.
  8. Kocher, Martin & Pahlke, Julius & Trautmann, Stefan, 2013. "An Experimental Study of Precautionary Bidding," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79690, Verein für Socialpolitik / German Economic Association.
  9. Olivier Bochet & Jeremy Laurent-Lucchetti & Justin Leroux & Bernard Sinclair-Desgagné, 2013. "Collective Dangerous Behavior: Theory and Evidence on Risk-Taking," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 13101, Institut d'Economie et Econométrie, Université de Genève.
  10. May Elsayyad & Florian Morath, 2013. "Technology Transfers for Climate Change," CESifo Working Paper Series 4521, CESifo Group Munich.
  11. Hiroaki Sakamoto, 2014. "Public Bads, Heterogeneous Beliefs, and the Value of Information," Discussion papers e-13-009, Graduate School of Economics Project Center, Kyoto University.
  12. Boucher, Vincent & Bramoullé, Yann, 2010. "Providing global public goods under uncertainty," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 591-603, October.

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