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Can international environmental cooperation be bought?

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  • Fuentes-Albero, Cristina
  • Rubio, Santiago J.

Abstract

In this paper a two-stage game of international environmental agreement formation with asymmetric countries is analytically solved. The equilibrium of the game makes it possible to determine the size and composition of a stable agreement. Two cases are studied. In the first case, countries differ only in abatement costs, while in the second case, they differ in environmental damages. In both cases, two different institutional settings, one without transfers and another with transfers, are considered. The results establish that the asymmetry assumption has no important effects on the scope of cooperation in comparison with the symmetric case if transfers are not used or abatement costs represent the only difference among countries. However, when the only difference is in environmental damages, the level of cooperation that can be bought through a self-financed transfer scheme increases with the degree of asymmetry.

Suggested Citation

  • Fuentes-Albero, Cristina & Rubio, Santiago J., 2010. "Can international environmental cooperation be bought?," European Journal of Operational Research, Elsevier, vol. 202(1), pages 255-264, April.
    • Handle: RePEc:eee:ejores:v:202:y:2010:i:1:p:255-264
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    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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