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Modesty Pays: Sometimes!

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Author Info
Michael Finus (Department of Economics, University of Hagen)

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Abstract

Standard non-cooperative game theoretical models of international environmental agreements (IEAs) draw a pessimistic picture of the prospective of successful cooperation: only small coalitions are stable that achieve only little. However, there also exist IEAs with higher participation and more success. In order to explain this phenomenon, this paper departs from the standard assumption of joint welfare maximization of coalition members, implying ambitious abatement targets and strong free-riding. Instead, it considers that countries agree on modest emission reduction targets. This may sufficiently raise participation so that the success of treaties improves in terms of global emission reduction and global welfare. Thus, modesty may pay, though the first best optimum cannot be achieved.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.68.

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Date of creation: Apr 2004
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Handle: RePEc:fem:femwpa:2004.68

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Related research
Keywords: International environmental agreements; Internal&external stability; Modest emission reduction;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Carraro, Carlo & Siniscalco, Domenico, 1995. "R&D Cooperation and the Stability of International Environmental Agreements," CEPR Discussion Papers 1154, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Henk Folmer & Pierre Mouche & Shannon Ragland, 1993. "Interconnected games and international environmental problems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(4), pages 313-335, August. [Downloadable!] (restricted)
  3. Petrakis, Emmanuel & Xepapadeas, Anastasios, 1996. "Environmental consciousness and moral hazard in international agreements to protect the environment," Journal of Public Economics, Elsevier, vol. 60(1), pages 95-110, April. [Downloadable!] (restricted)
  4. Finus, Michael & Rundshagen, Bianca, 1998. " Toward a Positive Theory of Coalition Formation and Endogenous Instrumental Choice in Global Pollution Control," Public Choice, Springer, vol. 96(1-2), pages 145-86, July. [Downloadable!] (restricted)
  5. Murdoch, James C. & Sandler, Todd, 1997. "The voluntary provision of a pure public good: The case of reduced CFC emissions and the Montreal Protocol," Journal of Public Economics, Elsevier, vol. 63(3), pages 331-349, February. [Downloadable!] (restricted)
  6. Carraro, Carlo & Marchiori, Carmen, 2002. "Stable Coalitions," CEPR Discussion Papers 3258, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Chander, Parkash & Tulkens, Henry, 1994. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," Working Papers 897, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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  8. Alfred Endres & Michael Finus, 2002. "Quotas May Beat Taxes in a Global Emission Game," International Tax and Public Finance, Springer, vol. 9(6), pages 687-707, November. [Downloadable!] (restricted)
  9. Michael Finus & Bianca Rundshagen, 1998. "Renegotiation–Proof Equilibria in a Global Emission Game When Players Are Impatient," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(3), pages 275-306, October. [Downloadable!] (restricted)
  10. Carlo Carraro & Carmen Marchiori & Sonia Oreffice, 2003. "Endogenous Minimum Participation in International Environmental Treaties," Working Papers 2003.113, Fondazione Eni Enrico Mattei. [Downloadable!]
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  11. Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March. [Downloadable!] (restricted)
  12. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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  13. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October. [Downloadable!] (restricted)
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  14. Böhringer, Christoph & Vogt, Carsten, 2002. "Dismantling of a breakthrough : the Kyoto Protocol - just symbolic policy!," ZEW Discussion Papers 02-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Arthur Caplan & Emilson Silva, 2007. "An equitable, efficient and implementable scheme to control global carbon dioxide emissions," International Tax and Public Finance, Springer, vol. 14(3), pages 263-279, June. [Downloadable!] (restricted)
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  2. Arthur Caplan, 2006. "A Comparison of Emission Taxes and Permit Markets for Controlling Correlated Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(4), pages 471-492, August. [Downloadable!] (restricted)
  3. Michael Finus & Juan-Carlos Altamirano-Cabrera & Ekko Ierland, 2005. "The effect of membership rules and voting schemes on the success of international climate agreements," Public Choice, Springer, vol. 125(1), pages 95-127, July. [Downloadable!] (restricted)
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