Potential Failure of an International Environmental Agreement under Asymmetric Information
The free-riding issue is generally considered to be the biggest obstacle in the success of an international environmental agreement. Even without free-riding incentives, however, asymmetric information can pose a potentially significant threat in establishing a cooperative relationship. In this note, we examine perfect Bayesian equilibria of a simple signaling game between a polluter country and a victim country over an agreement to mitigate unidirectional transboudary pollution. We show that the stalemate in addressing an international environmental issue can be explained partly by the incentive conflict due to asymmetric information on the environmental preference of a polluter. We also identify several conditions that allow such a stalemate to occur more easily.
Volume (Year): 17 (2004)
Issue (Month): 4 ()
|Contact details of provider:|| |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kennan, J. & Wilson, R., 1991.
"Bargaining with Private Information,"
90-01rev, University of Iowa, Department of Economics.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
- Claus Huber & Franz Wirl, 1996. "Optimal incentives to reduce transboundary emissions: Theory and empirical illustration to sulphur emissions in Austria and (former) Czechoslovakia," Empirica, Springer, vol. 23(2), pages 149-172, June.
- repec:cup:cbooks:9780521311120 is not listed on IDEAS
- repec:cup:cbooks:9780521322249 is not listed on IDEAS
- Missfeldt, Fanny, 1999. " Game-Theoretic Modelling of Transboundary Pollution," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 287-321, July.
When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-04q20003. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley)
If references are entirely missing, you can add them using this form.