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International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help?

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  • Finus, Michael

    ()
    (Exeter Business School)

  • Pintassilgo, Pedro

    ()
    (CIEO - Research Centre for Spatial and Organizational Dynamics)

Abstract

Na and Shin (1998) showed that the veil of uncertainty can be conducive to the success of self-enforcing international environmental agreements. Later papers confirmed this result. In the light of intensified research efforts worldwide to reduce uncertainty about the environmental impact of emissions and the cost of reducing them, the result is intriguing. The purpose of this paper is threefold. First, we analyze whether the result carries over to a more general setting without restriction on the number of players and which considers not only no and full learning but also partial learning, that is, three different scenarios of uncertainty dissipation. Second, we test whether the result also holds if there is uncertainty about abatement costs instead of uncertainty about the benefits from global abatement. Third, we propose a transfer scheme that mitigates the possible negative effect of learning and which may even transform it into a positive effect.

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Bibliographic Info

Paper provided by CIEO-Research Centre for Spatial and Organizational Dynamics, University of Algarve in its series Spatial and Organizational Dynamics Discussion Papers with number 2010-7.

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Length: 25 pages
Date of creation: 29 Oct 2010
Date of revision:
Handle: RePEc:ris:cieodp:2010_007

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Postal: University of Algarve, Faculty of Economics, Campus de Gambelas, 8005-139 Faro, Portugal, email of President of the Centre: mtvaz@ualg.pt
Phone: +351 289 244 406
Fax: 351-289-818303
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Web page: http://www.cieo.pt/
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Related research

Keywords: transnational cooperation; self-enforcing international environmental agreements; uncertainty; learning;

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References

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  1. 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.
  2. Barrett, Scott, 2001. "International cooperation for sale," European Economic Review, Elsevier, vol. 45(10), pages 1835-1850, December.
  3. Charles Kolstad, 2005. "Piercing the Veil of Uncertainty in Transboundary Pollution Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(1), pages 21-34, 05.
  4. Eyckmans, Johan & Finus, Michael, 2009. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Stirling Economics Discussion Papers 2009-10, University of Stirling, Division of Economics.
  5. Hans-Peter Weikard & Juan-Carlos Altamirano-Cabrera & Michael Finus, 2004. "The Impact of Surplus Sharing on The Stability of International Climate Agreements," Working Papers 2004.99, Fondazione Eni Enrico Mattei.
  6. Carsten Helm, 1998. "International Cooperation Behind the Veil of Uncertainty – The Case of Transboundary Acidification," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(2), pages 185-201, September.
  7. Kolstad, Charles D., 2007. "Systematic uncertainty in self-enforcing international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 68-79, January.
  8. Fuentes Albero Cristina & Rubio Jorge Santiago J., 2008. "Can International Environmental Cooperation Be Bought?," Working Papers 2010101, Fundacion BBVA / BBVA Foundation.
  9. 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.
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  14. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
  15. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
  16. Finus, Michael, 2008. "Game Theoretic Research on the Design of International Environmental Agreements: Insights, Critical Remarks, and Future Challenges," International Review of Environmental and Resource Economics, now publishers, vol. 2(1), pages 29-67, June.
  17. Oran R. Young, 2003. "Environment and Statecraft: The Strategy of Environmental Treaty-Making," Global Environmental Politics, MIT Press, vol. 3(1), pages 145-147, 02.
  18. Hans-Peter Weikard, 2005. "Cartel Stability under an Optimal Sharing Rule," Working Papers 2005.77, Fondazione Eni Enrico Mattei.
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Cited by:
  1. Fuhai Hong & Susheng Wang, 2012. "Climate Policy, Learning, and Technology Adoption in Small Countries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(3), pages 391-411, March.

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