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International Environmental Agreements with Asymmetric Countries

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  • Marta Biancardi

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  • Giovanni Villani

    ()

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    Abstract

    The paper investigates the stability of the International Environmental Agreement in a model of emission reduction. We consider a two stage game, in which in the first stage each country decides whether or not to join the agreement while, in the second stage, the quantity of emissions reduction is chosen. Agents may act cooperatively, building coalitions and acting according to the interest of the coalition, or they make their choices taking care of their individual interest only. Unlike conventional coalition stability models, we assume that countries are not identical but they are divided in two different kinds: developing countries and developed ones; the first have a lower attention about environmental pollution than developed ones. According to environmental awareness, stable coalitions of different sizes occur. On this subject, we present a Maple algorithm to compute the optimal costs and the abatement level for each coalition forms assuming an arbitrary number of developed and developing countries and to determine the internal and the external stability. In order to expand a coalition of any size to the grand coalition, which reaches the greatest abatement level and the lowest aggregate costs, we introduce monetary transfers.

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    Bibliographic Info

    Paper provided by Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia in its series Quaderni DSEMS with number 09-2009.

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    Length: 21 pages
    Date of creation: May 2009
    Date of revision:
    Handle: RePEc:ufg:qdsems:09-2009

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    Web page: http://www.dsems.unifg.it
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    Related research

    Keywords: IEA; Coalition stability; Implementation; Monetary Transfers;

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    References

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    1. Santiago J. Rubio & Alistair Ulph, 2006. "Self-enforcing international environmental agreements revisited," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 233-263, April.
    2. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2006. "Stable International Environmental Agreements: An Analytical Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 247-263, 05.
    3. Chander, Parkash & Tulkens, Henry, 1994. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," Working Papers 897, California Institute of Technology, Division of the Humanities and Social Sciences.
    4. Aart de Zeeuw, 2005. "Dynamic Effects on the Stability of International Environmental Agreements," Working Papers 2005.41, Fondazione Eni Enrico Mattei.
    5. Chander, P. & Tulkens, H., . "The core of an economy with multilateral environmental externalities," CORE Discussion Papers RP -1276, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Carraro, Carlo & Eyckmans, Johan & Finus, Michael, 2005. "Optimal Transfers and Participation Decisions in International Environmental Agreements," CEPR Discussion Papers 5046, C.E.P.R. Discussion Papers.
    7. 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.
    8. d'ASPREMONT, Claude & JACQUEMIN, Alexis & GABSZEWICZ, Jean J. & WEYMARK, John A., . "On the stability of collusive price leadership," CORE Discussion Papers RP -522, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
    10. CHANDER, Parkash & TULKENS, Henry, . "Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems," CORE Discussion Papers RP -983, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Zeeuw, A.J. de, 2008. "Dynamic effects on the stability of international environmental agreements," Open Access publications from Tilburg University urn:nbn:nl:ui:12-377597, Tilburg University.
    12. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
    13. Porchiung Chou & Cheickna Sylla, 2008. "The formation of an international environmental agreement as a two-stage exclusive cartel formation game with transferable utilities," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 317-341, December.
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