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International environmental agreements with mixed strategies and investment

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  • Hong, Fuhai

    ()
    (School of Economics, Shanghai University of Finance and Economics)

  • Karp, Larry

    ()
    (University of California, Berkeley. Dept of agricultural and resource economics)

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 is higher in equilibria that involve higher investment.

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Bibliographic Info

Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1129.

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Length: 35 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:are:cudare:1129

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Keywords: international environmental agreement; climate agreement; participation games; investments; mixed strategy;

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References

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Cited by:
  1. Karp, Larry & Simon, Leo, 2012. "Participation games and international environmental agreements: a nonparametric model," CUDARE Working Paper Series 1127, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  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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