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A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution

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  • CHANDER, Parkash

    (California Institute of Technology, Pasadena and Indian Statistical Institute (ISI), New Delhi)

  • TULKENS, Henry

    ()
    (CORE and IRES, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

Abstract

For a simple economic model of transfrontier pollution, widely used in theoretical studies of international treaties bearing on joint abatement, we exhibit in this paper a scheme for sharing national abatement costs, through international financial transfers, which is inspired by a very classical solution concept offered in the theory of cooperative games, namely the "core" of a game. The scheme has the following properties: (i) total damage and abatement costs in all countries are minimized (optimality property), and (ii) no "coalition", Le. subset, of countries can achieve lower such total costs for its members by taking another course of action in terms of emissions and/or transfers, under some reasonable assumption as to the reactions of those not in the coalition (core property).

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1994048.

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Date of creation: 01 Oct 1994
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Handle: RePEc:cor:louvco:1994048

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  1. Dasgupta, Partha & Hammond, Peter & Maskin, Eric, 1980. "On Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Wiley Blackwell, vol. 47(5), pages 857-60, October.
  2. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  3. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
  4. Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
  5. CHANDER, Parkash & TULKENS, Henry, 1995. "The Core of an Economy with Multilateral Environmental Externalities," CORE Discussion Papers 1995050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Dreze, Jacques H & de la Vallee Poussin, D, 1971. "A Tatonnement Process for Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 133-50, April.
  7. Chander, Parkash, 1993. "Dynamic Procedures and Incentives in Public Good Economies," Econometrica, Econometric Society, vol. 61(6), pages 1341-54, November.
  8. Shapley, Lloyd S & Shubik, Martin, 1969. "On the Core of an Economic System with Externalities," American Economic Review, American Economic Association, vol. 59(4), pages 678-84, Part I Se.
  9. Herbert E. Scarf, 1970. "On the Existence of a Cooperative Solution for a General Class of N-Person Games," Cowles Foundation Discussion Papers 293, Cowles Foundation for Research in Economics, Yale University.
  10. Kwerel, Evan, 1977. "To Tell the Truth: Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 595-601, October.
  11. Chander, Parkash & Tulkens, Henry, 1992. "Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems," European Economic Review, Elsevier, vol. 36(2-3), pages 388-399, April.
  12. Germain, Marc & Toint, Philippe & Tulkens, Henry, 1994. "Calcul économique itératif pour les négociations internationales sur les pluies acides entre la Finlande, la Russie et l'Estonie," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1994017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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  1. > Environmental and Natural Resource Economics > Climate economics > International agreements
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