In this paper we test empirically with the Nordhaus and Yang (1996) RICE model the core property of the transfer scheme adv ocated by Germain, Toint and Tulkens (1997). This scheme is designed to sustain full cooperation in a voluntary international environmental agreement by making all countries at least as well off as they would be by joining coalitions adopting emission abatement policies that maximize their coalition payoff; under the scheme no individual country, nor any subset of countries would have an interest in leaving the international environmental agreement. The simulations show that the transfer scheme yields an allocation in the core of the carbon emission abatement game associated with the RICE model. Finally, we discuss some practical implications of the transfer scheme for current climate negotiations.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 228.
Find related papers by JEL classification: C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General F20 - International Economics - - International Factor Movements and International Business - - - General F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation
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