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Stability of international environmental agreements under isoelastic utility

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  • Nkuiya, Bruno

Abstract

There is now a growing consensus that ratifying International Environmental Agreements (IEAs) is the most effective way to tackle transboundary pollution problems. While the social benefit function (SBF) critically affects emission choices as well as decisions to ratify IEAs, the related economic literature has mainly concentrated on scenarios where the marginal SBF is linear. Using climatic data, I find that the linear marginal SBF case does not match data and isoelastic SBFs fit data better. In the more realistic, but not yet explored, context of isoelastic SBFs, I reconsider incentives to ratify IEAs. My analysis gives rise to novel conclusions. For instance, changes in the scale of damages do not affect the level of cooperation. When the scale of damages is small, variations of the SBF parameter reveal that large coalitions including the coalition of all countries are stable, but only when the potential gain from cooperation is sufficiently high.

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  • Nkuiya, Bruno, 2020. "Stability of international environmental agreements under isoelastic utility," Resource and Energy Economics, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:resene:v:59:y:2020:i:c:s0928765519301095
    DOI: 10.1016/j.reseneeco.2019.101128
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    More about this item

    Keywords

    International agreements; Transboundary pollution; Isoelastic utility; Quadratic damage function; Strategic behaviors;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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