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Stable International Environmental Agreements: An Analytical Approach

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  • EFFROSYNI DIAMANTOUDI
  • EFTICHIOS S. SARTZETAKIS

Abstract

In this paper we examine the formation of international environmental agreements (IEAs). We show that the welfare of the signatories does not increase monotonically with respect to the number of signatories. We provide an analytical solution of the leadership model. In particular, we find that if the number of countries is greater than four then there exists a unique stable IEA with either two, three, or four signatories. Furthermore, we show that the welfare of the signatories is almost at its lowest level when the IEA is stable. While in our model each country's choice variable is emissions, we extend our results to the case where the choice variable is abatement efforts. Copyright 2006 Blackwell Publishing Inc..

Suggested Citation

  • 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, May.
  • Handle: RePEc:bla:jpbect:v:8:y:2006:i:2:p:247-263
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    References listed on IDEAS

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    1. Ioannidis, Alexis & Papandreou, Andreas & Sartzetakis, Eftichios, 2000. "International Environmental Agreements: a Literature Review," Cahiers de recherche 0008, GREEN.
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    3. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, pages 309-328.
    4. S. De Cara & Gilles Rotillon, 2003. "Multigreenhouse gas international agreements," THEMA Working Papers 2003-13, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    5. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(3), pages 379-401.
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    7. Ray, Debraj & Vohra, Rajiv, 1999. "A Theory of Endogenous Coalition Structures," Games and Economic Behavior, Elsevier, vol. 26(2), pages 286-336, January.
    8. Hanley, Nick & Shogren, Jason, 2007. "Introduction," Journal of Forest Economics, Elsevier, vol. 13(2-3), pages 73-74, August.
    9. Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March.
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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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