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Informational Benefits of International Environmental Agreements

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  • Amihai Glazer

    ()
    (Department of Economics, University of California-Irvine)

  • Stef Proost

    ()
    (Center for Economic Studies, KULeuven)

Abstract

Given that it is difficult to monitor, and even more so to enforce, International Environmental Agreements, it is surprising that they are signed and implemented. This paper offers a theoretical model, which addresses the phenomena. The focus is on informational and coordination problems--a country which is unsure about the benefits of environmental policy may believe that the benefits are higher the greater the number of other countries which lean towards taking action. Whereas each country may individually take no environmental action, in equilibrium several countries may take environmental action if they expect others to. An International Environmental Agreement can thus be self-enforcing. Such effects can appear even if international environmental spillovers are absent, and even if monitoring and enforcement are infeasible. Our approach can explain additional phenomena: why a country that is known to care little about the environment may deeply influence other countries if it takes environmental action, why lags may appear between the signing of an agreement and its implementation, and how requirements for approval by several bodies within a country can increase support for environmental action.

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File URL: http://www.economics.uci.edu/files/economics/docs/workingpapers/2007-08/glazer-10.pdf
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Bibliographic Info

Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 070810.

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Length: 17 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:irv:wpaper:070810

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Keywords: Environmental policy; International agreements; Signaling; Regulation;

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  1. Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
  2. Chander, P. & Tulkens, H., . "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," CORE Discussion Papers RP -1158, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Baron, David P., 2002. "Private Politics and Private Policy: A Theory of Boycotts," Research Papers 1766, Stanford University, Graduate School of Business.
  4. Robert Innes, 2006. "A Theory of Consumer Boycotts under Symmetric Information and Imperfect Competition," Economic Journal, Royal Economic Society, vol. 116(511), pages 355-381, 04.
  5. Guth, W., 1993. "A Simple Justification of Quantity Competition and the Cournot-Oligopoly Solution," Discussion Paper 1993-5, Tilburg University, Center for Economic Research.
  6. Murdoch, James C. & Sandler, Todd & Vijverberg, Wim P. M., 2003. "The participation decision versus the level of participation in an environmental treaty: a spatial probit analysis," Journal of Public Economics, Elsevier, vol. 87(2), pages 337-362, February.
  7. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
  8. Wolfgang Buchholz & Alexander Haupt & Wolfgang Peters, 2005. "International Environmental Agreements and Strategic Voting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 175-195, 03.
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Cited by:
  1. Kimiko Terai, 2012. "Financial Mechanism and Enforceability of International Environmental Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(2), pages 297-308, October.

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