Uncertainty and International Negotiations on Tradable Quota Treaties
AbstractNegotiating an international tradable quota treaty between industrialised and developing countries is complicated by uncertain marginal abatement costs and non-uniform quota prices. An initial quota allocation that implies zero expected net cost to developing countries will typically be insufficient to attract their participation in the treaty. Two options to compensate for uncertainty are discussed here, extra emissions quotas and financial transfers. The latter is found to be more effective in facilitating treaty-making, but the scope of co-operation is restricted by the developing countries’ risk-aversion.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 233.
Date of creation: Oct 1998
Date of revision:
Tradable quotas; uncertainty;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
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