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The Impact of Surplus Sharing on The Stability of International Climate Agreements

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Author Info
Hans-Peter Weikard (Department of Social Sciences, Environmental Economics and Natural Resources Group, Wageningen University)
Juan-Carlos Altamirano-Cabrera (Department of Social Sciences, Environmental Economics and Natural Resources Group, Wageningen University)
Michael Finus (Department of Economics, Hagen University)

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Abstract

This paper analyses stability of coalitions for greenhouse gas abatement for different sharing rules applied to the gains from co-operation. We use a 12-regions model designed to examine internal and external stability of coalitions (STACO). We compare different sharing rules like, for example, grandfathering (i.e. sharing proportional to emissions) and a number of so-called equitable rules like, for example, sharing proportional to population or according to historical responsibilities. Due to strong free-rider incentives we find only small stable coalitions for all sharing rules examined. As a general pattern we observe that coalitions consist of regions with low marginal abatement costs, which are attractive partners in any coalition, and regions which have the highest claims according to the respective sharing rule. Furthermore, we find that a grandfathering scheme leads to the largest and – in terms of greenhouse gas abatement – most successful coalition, while many of the equitable rules achieve very little.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.99.

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Date of creation: Jun 2004
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Handle: RePEc:fem:femwpa:2004.99

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Related research
Keywords: International environmental agreements; Sharing rules; Stability of coalitions;

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Find related papers by JEL classification:
D62 - Microeconomics - - Welfare Economics - - - Externalities
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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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. Adam Rose & Brandt Stevens & Jae Edmonds & Marshall Wise, 1998. "International Equity and Differentiation in Global Warming Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(1), pages 25-51, July. [Downloadable!] (restricted)
  2. Na, Seong-lin & Shin, Hyun Song, 1998. "International Environmental Agreements under Uncertainty," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 173-85, April.
  3. Pfingsten, Andreas, 1991. "Surplus-sharing methods," Mathematical Social Sciences, Elsevier, vol. 21(3), pages 287-301, June. [Downloadable!] (restricted)
  4. 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!]
    Other versions:
  5. 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)
  6. Michael Finus & Ekko Ierland & Rob Dellink, 2006. "Stability of Climate Coalitions in a Cartel Formation Game," Economics of Governance, Springer, vol. 7(3), pages 271-291, August. [Downloadable!] (restricted)
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  7. Kverndokk, S., 1992. "Tradeable CO2 Emission Permits: Initial Distribution as a Justice Problem," Memorandum 23/1992, Oslo University, Department of Economics.
  8. Francesco Bosello & Barbara Buchner & Carlo Carraro, 2003. "Equity, Development, and Climate Change Control," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 601-611, 04/05. [Downloadable!] (restricted)
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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. Miyuki Nagashima & Rob Dellink, 2008. "Technology spillovers and stability of international climate coalitions," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 343-365, December. [Downloadable!] (restricted)
    Other versions:
  2. Carraro, Carlo & Eyckmans, Johan & Finus, Michael, 2005. "Optimal Transfers and Participation Decisions in International Environmental Agreements," CEPR Discussion Papers 5046, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Johan Eyckmans & Michael Finus, 2007. "Measures to enhance the success of global climate treaties," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 7(1), pages 73-97, March. [Downloadable!] (restricted)
  4. Porchiung Chou & Cheickna Sylla, 2008. "The formation of an international environmental agreement as a two-stage exclusive cartel formation game with transferable utilities," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 317-341, December. [Downloadable!] (restricted)
  5. Juan-Carlos Altamirano-Cabrera & Michael Finus, 2006. "Permit trading and stability of international climate agreements," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 19-48, May. [Downloadable!] (restricted)
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