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Leadership and self-enforcing international environmental agreements with non-negative emissions

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  • Rubio, S.
  • Ulph, A.

Abstract

For the widely-used linear-quadratic model of stable IEAs the key results are: (i) if the members of the IEA act in a Cournot fashion with respect to non-signatories, a stable IEA has no more than 2 signatories; (ii) if the signatories act as Stackelberg leaders, a stable IEA can have any number of signatories. These results were derived using numerical simulations and ignored the non-negativity constraint on emissions. Recent papers using analytical approaches and explicitly recognising the non-negativity constraint have suggested that with Stackelberg leadership a stable IEA has at most four signatories. Such papers have introduced non-negativity constraints by restricting parameter values to ensure interior solutions for emissions, which restricts the number of signatories. We use the more appropriate approach of directly imposing the non-negativity constraint on emissions, recognising that for some parameter values this will entail corner solutions, and show, analytically, that the key results from the literature go through.

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Bibliographic Info

Paper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 0211.

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Date of creation: 01 Jan 2002
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Handle: RePEc:stn:sotoec:0211

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References

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  1. Ecchia, Giulio & Mariotti, Marco, 1998. "Coalition formation in international environmental agreements and the role of institutions," European Economic Review, Elsevier, Elsevier, vol. 42(3-5), pages 573-582, May.
  2. Chander, P. & Tulkens, H., . "The core of an economy with multilateral environmental externalities," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1276, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2001. "Stable International Environmental Agreements: An Analytical Approach," Working Papers, Concordia University, Department of Economics 04001, Concordia University, Department of Economics, revised Feb 2003.
  4. Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March.
  5. Rubio, Santiago J. & Ulph, Alistair, 2007. "An infinite-horizon model of dynamic membership of international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 54(3), pages 296-310, November.
  6. Santiago J. Rubio, 2001. "International Cooperation In Pollution Control," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 2001-21, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  7. Rubio, S. & Ulph, A., 2002. "A simple dynamic model of international environmental agreements with a stock pollutant," Discussion Paper Series In Economics And Econometrics, Economics Division, School of Social Sciences, University of Southampton 0209, Economics Division, School of Social Sciences, University of Southampton.
  8. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 16(1), pages 17-25, February.
  9. Wagner, Ulrich J, 2001. " The Design of Stable International Environmental Agreements: Economic Theory and Political Economy," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 15(3), pages 377-411, July.
  10. Petrakis, Emmanuel & Xepapadeas, Anastasios, 1996. "Environmental consciousness and moral hazard in international agreements to protect the environment," Journal of Public Economics, Elsevier, Elsevier, vol. 60(1), pages 95-110, April.
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Cited by:
  1. Alistair Ulph & Santiago J. Rubio, 2004. "Self-Enforcing International Environmental Agreements Revisited," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 2004-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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