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

Listed author(s):
  • Larry Karp
  • Jinhua Zhao

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

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Article provided by Presses de Sciences-Po in its journal Revue économique.

Volume (Year): 61 (2010)
Issue (Month): 1 ()
Pages: 153-182

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Handle: RePEc:cai:recosp:reco_611_0153
Contact details of provider: Web page: http://www.cairn.info/revue-economique.htm

References listed on IDEAS
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  1. Michael Hoel & Larry Karp, 1999. "Taxes and Quotas for a Stock Pollutant with Multiplicative Uncertainty," Working Papers 1999.15, Fondazione Eni Enrico Mattei.
  2. Karp, Larry & Zhang, Jiangfeng, 2006. "Regulation with anticipated learning about environmental damages," Journal of Environmental Economics and Management, Elsevier, vol. 51(3), pages 259-279, May.
  3. Karp, Larry & Zhao, Jinhua, 2007. "A Proposal to Reform the Kyoto Protocol: the Role of Escape Clauses and Foresight," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5b10v2jr, Department of Agricultural & Resource Economics, UC Berkeley.
  4. Stiglitz Joseph, 2006. "A New Agenda for Global Warming," The Economists' Voice, De Gruyter, vol. 3(7), pages 1-4, July.
  5. Stranlund, John K & Chavez, Carlos A, 2000. "Effective Enforcement of a Transferable Emissions Permit System with a Self-Reporting Requirement," Journal of Regulatory Economics, Springer, vol. 18(2), pages 113-131, September.
  6. Hoel, Michael & Karp, Larry, 2001. "Taxes versus Quotas for a Stock Pollutant," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5fx9p7kf, Department of Agricultural & Resource Economics, UC Berkeley.
  7. Malik, Arun S., 1990. "Markets for pollution control when firms are noncompliant," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 97-106, March.
  8. Robert N. Stavins, 2008. "Addressing Climate Change with a Comprehensive U.S. Cap-and-Trade System," Working Papers 2008.67, Fondazione Eni Enrico Mattei.
  9. Matthew McGinty, 2007. "International environmental agreements among asymmetric nations," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 45-62, January.
  10. Pizer, William & Newell, Richard, 1998. "Regulating Stock Externalities Under Uncertainty," Discussion Papers dp-99-10-rev, Resources For the Future.
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