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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. 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.
  2. Karp, Larry & Simon, Leo, 2013. "Participation games and international environmental agreements: A non-parametric model," Journal of Environmental Economics and Management, Elsevier, vol. 65(2), pages 326-344.

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