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Solving the GlobalWarming Problem: Beyond Markets, Simple Mechanisms May Help!

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  • Martimort, David
  • Sand-Zantman, Wilfried

Abstract

This paper discusses the feasibility and performances of simple mechanisms to implement international environmental agreements in the multilateral externalities context of global warming. Asymmetric information and voluntary participation by sovereign and heterogenous countries are key constraints on the design of those agreements. Mechanisms must prevent two sorts of free-riding problems - free riding in effort provision and free riding in participation. As markets might fail to solve simultaneously those two problems, we construct instead a simple menu of options that trades off the provision of incentives for participating countries and the provision of incentives to participate.With such mechanism, all countries voluntary contribute to a fund, although at different intensities, but only the most efficient ones effectively reduce their pollution below its “business as usual” level.

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Bibliographic Info

Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 746.

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Date of creation: Oct 2012
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Publication status: Published in Canadian Journal of Economics, vol.�46, n°2, University of Toronto Press, Toronto, mai 2013, p.�361-378.
Handle: RePEc:ide:wpaper:26339

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References

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  1. 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.
  2. Sandeep Baliga & Eric Maskin, 2002. "Mechanism Design for the Environment," Economics Working Papers 0024, Institute for Advanced Study, School of Social Science.
  3. Martimort, David & Sand-Zantman, Wilfried, 2011. "A Mechanism Design Approach to Climate Agreements," TSE Working Papers 11-251, Toulouse School of Economics (TSE), revised 30 Apr 2013.
  4. Cheikbossian, Guillaume & Sand-Zantman, Wilfried, 2008. "Dynamic Cooperation in Local Public Goods Supply with Imperfect Monitoring," IDEI Working Papers 527, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Parkash Chander & Henry Tulkens, 1995. "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," International Tax and Public Finance, Springer, vol. 2(2), pages 279-293, August.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Taking care of free-riders in global warming policies
    by Economic Logician in Economic Logic on 2012-11-14 15:26:00
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Cited by:
  1. Ngo Van Long, 2014. "The Green Paradox in Open Economies," CESifo Working Paper Series 4639, CESifo Group Munich.

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