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International Environmental Agreements with mixed strategies and investment

  • Hong, Fuhai
  • Karp, Larry

We modify a canonical participation game used to study International Environmental Agreements (IEA), considering both mixed and pure strategies at the participation stage, and including a prior cost-reducing investment stage. The use of mixed strategies at the participation stage reverses a familiar result and also reverses the policy implication of that result: with mixed strategies, equilibrium participation and welfare are higher in equilibria that involve higher investment.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 96 (2012)
Issue (Month): 9-10 ()
Pages: 685-697

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Handle: RePEc:eee:pubeco:v:96:y:2012:i:9:p:685-697
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