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How long can excess pollution persist? The non-cooperative case

  • Hénin, Pierre-Yves
  • Schubert, Katheline

This paper describes a world composed of two (groups of) countries, which derive their utility from a polluting activity and from the enjoyment of a common environmental quality. The initial situation is both suboptimal and unsustainable: pollution leads to a continuous deterioration of environmental quality. The two countries have heterogeneous preferences for the environment, which are private knowledge. This prevents the adoption of abatement policies negotiated between the two countries, because each one has a strong incentive to announce in every negotiation an arbitrarily low preference for the environment. The two countries then engage in a war of attrition, each of them postponing abatement policies, in the hope that the other will concede first and abate more. We study for how long the adjustment is postponed, according to initial conditions, the greenness of the greenest country, the possible range of preferences and the rates of discount and natural regeneration.

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Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 2 (May)
Pages: 277-293

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Handle: RePEc:eee:resene:v:30:y:2008:i:2:p:277-293
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505569

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  1. Jeremy I. Bulow & Paul Klemperer, 1996. "The Generalized War of Attrition," Cowles Foundation Discussion Papers 1142, Cowles Foundation for Research in Economics, Yale University.
  2. Bliss, Christopher & Nalebuff, Barry, 1984. "Dragon-slaying and ballroom dancing: The private supply of a public good," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 1-12, November.
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  5. Casella, Alessandra & Eichengreen, Barry, 1996. "Can Foreign Aid Accelerate Stabilisation?," Economic Journal, Royal Economic Society, vol. 106(436), pages 605-19, May.
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  8. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  9. Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
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