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International Environmental Agreements: Emissions Trade, Safety Valves and Escape Clauses

Author

Listed:
  • Larry Karp
  • Jinhua Zhao

Abstract

We explain how the structure of multi-national or multi-regional environmental agreements affect their chance of success. Trade in emissions permits has ambiguous and in some cases surprising effects on both the equilibrium level of abatement, and on the ability to persuade nations or regions to participate in environmental agreements. An escape clause policy and a safety valve policy have essentially the same properties when membership in environmental agreement is pre-determined, but they create markedly different effects on the incentives to join such an agreement. The two policies lead to a qualitative difference in the leverage that a potential member of the agreement exercises on other members. JEL classification numbers C72, H4, Q54

Suggested Citation

  • Larry Karp & Jinhua Zhao, 2010. "International Environmental Agreements: Emissions Trade, Safety Valves and Escape Clauses," Revue économique, Presses de Sciences-Po, vol. 61(1), pages 153-182.
    • Handle: RePEc:cai:recosp:reco_611_0153
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    Cited by:

    1. Gersbach, Hans & Hummel, Noemi, 2016. "A development-compatible refunding scheme for a climate treaty," Resource and Energy Economics, Elsevier, vol. 44(C), pages 139-168.
    2. Kassab, Dina & Zaki, Chahir, 2025. "Agree to disagree? Making sense of vagueness in International Environmental Agreements," Energy Economics, Elsevier, vol. 150(C).
    3. Etienne Inedit Blaise Tsomb Tsomb & Henri Ondoa Atangana, 2023. "Multilateral environmental agreements and the growth of total factor productivity in developing countries: evidence from the foreign direct investment channel," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(11), pages 12965-12997, November.
    4. Gersbach, Hans & Hummel, Noemi, 2011. "Climate Policy and Developing Countries," CEPR Discussion Papers 8685, C.E.P.R. Discussion Papers.
    5. Fredriksson, Per G. & Sharma, Swati & Wollscheid, Jim R., 2025. "Legal traditions and the ratification of the Paris agreement," Energy Economics, Elsevier, vol. 149(C).

    More about this item

    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H4 - Public Economics - - Publicly Provided Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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