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Side Payments of Exceptions: The Implications for Equitable and Efficient Climate Control


  • Kristen A. Sheeran

    () (St. Mary's College of Maryland)


The Kyoto Protocol prioritizes equity in international climate control by exempting developing countries from compulsory emissions reductions, though at a loss to efficiency. Using game theoretic models, this paper demonstrates that an efficient climate treaty must provide side payments to countries with lower marginal abatement costs and (or) benefits to induce their cooperation. Therefore, if an efficient treaty directs side payments to developing countries to induce their participation, the treaty may also achieve equity in climate control. Policy makers should remember the equity and efficiency implications of side payments as extensions and/or alternatives to the Kyoto Protocol are considered.

Suggested Citation

  • Kristen A. Sheeran, 2006. "Side Payments of Exceptions: The Implications for Equitable and Efficient Climate Control," Eastern Economic Journal, Eastern Economic Association, vol. 32(3), pages 515-532, Summer.
  • Handle: RePEc:eej:eeconj:v:32:y:2006:i:3:p:515-532

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    1. Karl-Göran Mäler & Aart De Zeeuw, 1998. "The Acid Rain Differential Game," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(2), pages 167-184, September.
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    3. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    4. J. E. Stiglitz, 1999. "Introduction," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 28(3), pages 249-254, November.
    5. Chen, Zhiqi, 1997. "Negotiating an Agreement on Global Warming: A Theoretical Analysis," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 170-188, February.
    6. Arthur J. Caplan & Richard C. Cornes & Emilson C. D. Silva, 2003. "An ideal Kyoto protocol: emissions trading, redistributive transfers and global participation," Oxford Economic Papers, Oxford University Press, vol. 55(2), pages 216-234, April.
    7. Tahvonen Olli & Kaitala Veijo & Pohjola Matti, 1993. "A Finnish - Soviet Acid Rain Game: Noncooperative Equilibria, Cost Efficiency, and Sulfur Agreements," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 87-100, January.
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