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A Non-Cooperative Theory Of Quantity-Rationing International Transfrontier Pollution

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  • Sudhir A. Shah

    (Delhi School of Economics)

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    Abstract

    We study the problem caused by international transfrontier pollution. Our re-sults are derived from the analysis of an incomplete information, non-cooperative game model of the determination of emissions in a quantity-rationing setting. We model the emission capping negotiations using the best response dynamic pro-cess and provide natural conditions under which the process has a unique and globally asymptotically stable stationary point. We then analyze the link be-tween type profiles and the stationary points of the negotiation process to derive various comparative statics results and the type-contingent ordering of emission allocations. Finally, we study the investment strategies that nations can use prior to the negotiations in order to manipulate the equilibrium emission caps. The results have implications regarding the political economy of emission capping.

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    Bibliographic Info

    Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 143.

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    Length: 39 pages
    Date of creation: Aug 2006
    Date of revision:
    Handle: RePEc:cde:cdewps:143

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    Related research

    Keywords: Emission capping; non-cooperative game; negotiations; incomplete information; manipulation;

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