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Regional initiatives and the cost of delaying binding climate change agreements

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  • Beccherle, Julien
  • Tirole, Jean

Abstract

The Kyoto and Copenhagen Protocols on climate change mitigation postponed the specification of binding commitments to a future negotiation. This paper analyzes the strategic implications of delayed negotiations. While, as is well-understood, the incentive to free ride leads to excessive emissions prior to a binding agreement, the cost of delay is magnified by players' attempt to secure a favorable bargaining position in the future negotiation. A “brinkmanship”, an “effort substitution”, and a “raising rival's cost” effects all concur to generate high post-agreement emissions. The paper applies this general insight to the issuance of forward or bankable permits.

Suggested Citation

  • Beccherle, Julien & Tirole, Jean, 2011. "Regional initiatives and the cost of delaying binding climate change agreements," Journal of Public Economics, Elsevier, vol. 95(11), pages 1339-1348.
  • Handle: RePEc:eee:pubeco:v:95:y:2011:i:11:p:1339-1348
    DOI: 10.1016/j.jpubeco.2011.04.007
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    More about this item

    Keywords

    International negotiations; Climate change; Cap and trade; Bankable permits;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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